Barclays on their CNY outlook for the coming new year
- USDCNY is likely to register a flat prfile around 6.60 over much of our forecast horizon
- But the CNY is likely to strengthen as the USD weakens broadly into H2 2018
- Chinas exchange rate policy larks clarity even after the 19th Party Congress, as questions about policy continuity at the PBOC remain
- China likely warts to maintain a stable a stile currency in both spot atnd NEER terms to placate the US in trade discussions and to limit capital outflows
- A gradual easng of capital contras is likely, suggesting limited FX pressure in the near term
- We recommend a short USDCNH carry trade