CNY weakened sharply last week. Economists at Commerzbank expect Yuan to remain under downside pressure.

CNY weakness should remain in the near term

“Last Friday, the PBoC issued a statement that vowed to curb speculation and called for more stability in the foreign exchange market. The announcement came as a surprise given that the PBoC did not appear to be defending the CNY decisively.”

“While CNY appreciated temporarily against the Dollar following the PBoC statement, currency weakness should remain in the near term.”

“The contrast between China’s monetary easing stance and tightening bias of central banks in the US and Euro area will continue to weigh on CNY.”