USD-CNY reverses higher – HSBC

The RMB strengthening trend continued in the first week of the September month, with USD-CNY breaking below 6.45 on 8 September, reaching a 21-month low, notes the analysis team at HSBC.

Key Quotes

“The market continued to be fixated on the USD-CNY band as the PBoC’s decision to continue to strengthen the trading band pushed USD-CNY lower.”

“However, from 9 September this strength in RMB began to reverse. On 11 September, the RMB weakened sharply following the announcement that the PBoC would reverse a previous capital reserve requirement that was aimed at discouraging the selling of the RMB. The weakening RMB continued as we moved towards the FOMC on 20 September. So from having broken 6.45 on 8 September the RMB weakened as the month progressed, with USD-CNY hitting the month’s high of 6.6832 on 29 September.”