USD/CNY targets 6.75 in a 12-month horizon – Danske Bank

Allan von Mehren, Chief Analyst at Danske Bank, assessed the prospects of the Chinese currency in the next months.

Key Quotes

“Two opposing forces affect USD/CNY going forward. On the one hand, we expect a Chinese slowdown in combination with continued Fed hikes. This would put upward pressure on USD/CNY. On the other hand, we expect the overall weakening trend of the USD to continue over the next year. This tends to put downward pressure on USD/CNY – as seen this year. We expect the two forces to broadly even out, although we look for a slight increase in USD/CNY to 6.75 in 12M”.

“Against the EUR, we continue to look for weakening to 8.38 on 12M from 7.79 today and continue to recommend EURbased corporates hedge CNY receivables”.

“We expect the CNY-CNH spread to continue to trade close to zero but with temporary deviations from time to time”.