CNY fixing has been set sharply weaker over recent days, suggesting that the People’s Bank of China (PBoC) is increasingly concerned about CNY strength. Prospects for more aggressive steps to weaken the currency are growing and the near-term outlook for CNY/CNH is worsening, economists at TD Securities.

PBoC increasingly concerned about CNY strength amid weaker growth momentum

“We continue to expect cuts in the Loan Prime Rate (LPR) and Reserve Requirement Ratio (RRR) in the weeks ahead as growth loses momentum.”

“We note that the CNY fixing has been set sharply weaker over recent days, suggesting that the PBoC is increasingly concerned about CNY strength at a time of weaker growth momentum.” 

“The prospects for more aggressive steps to weaken the currency are growing and the near-term outlook for CNY/CNH is worsening.”