CNY comes under downward pressure - Rabobank

Michael Every, Head of Financial Markets Research at Rabobank, notes that China has just announced that it will require foreign banks to set aside a 20% reserve requirement for all CNH forward trades from August 15.

Key Quotes

“A similar requirement was originally put in place last year for Chinese domestic banks. Once again such measures are being brought in as CNY comes under downward pressure: the 6.70 psychological barrier was crossed shortly after 6.60 and 6.50 were, with some chatter that 6.80 might be the next line in the sand - given that’s just 1.5% away from where we are now in extremely volatile market conditions, it may prove to be wishful thinking.”