ANZ ask the question and answer honestly that for now, " We are putting all our Asian currency forecasts under review"
Some snippets from their report:
- (Monday's) weak fixing is the first sign that the Chinese authorities are now finally willing to adopt a hands-off approach and allow the exchange rate to be market-determined. After numerous attempts in recent years to prevent the yuan from weakening past the 7 level, they have decided to let it go
- it is not inconceivable that we could see the offshore yuan heading towards the 7.15-7.20 level in the near-term.
- And if indeed it were the case that the currency were to completely offset the full impact of the US tariffs including the 10% to be imposed on 1 September, then that would imply a level closer to 7.40, though we think that would be a step too far.
