A client note from Macquarie (out Thursday) on China and the currency
Says the country may be willing to put up with a weaker yuan still, but does not want a sharp devaluation like 2015 and 2016
MBL cite:
- growing pressure for easier domestic liquidity
- economy slowing
- trade tension with US worsening
MBL nominate a gradual fall to 6.9 for the CNY by the end of the year as a rate China would be comfortable with. And say intervention (selling USD/CNY) is limited by China's objective of keeping domestic liquidity plentiful
