China's Economic Policy Points To Continued Flexibility In The USD/CNY Rate

USD/CNH has reached the top end of Credit Suisse’s forecasted 7.00-7.35 trading range. Therefore, the Q4 USD/CNH target has been revised to 7.10-7.55. 

Continuity in economic policy points to further “flexibility” on the exchange rate

“President Xi did not specifically mention FX policy during his Work Report speech, but continuity in economic policy points to further ‘flexibility’ on the USD/CNY exchange rate.” 

“Tuesday’s USD/CNY fix (to 7.1668, an increase of 438 pips) ‘broke’ the previous USD/CNY fix range of 7.10-7.12 seen since 10 October, confirming that yuan weakness can continue.” 

“We expect negative sentiment in China equities to continue spilling over into the yuan, and now raise our Q4 USD/CNH forecast range to 7.10-7.55.”