CNY: Little evidence of panic or fallout - AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, notes that the one-off devaluation in CNY in August last year triggered widespread risk aversion. 

Key Quotes

“This flared up again in January.  However, there is little evidence of negative fallout from the weaker CNY this year.  If anything global asset markets, especially emerging markets, have remained resilient.

USD/CNY FX implied volatility and FX forward points are relatively stable, well below levels at the beginning of the year.  Nevertheless, the capital outflow does appear to be persistent and has picked up recently.  This may contribute to some tightening of liquidity conditions in China, and it might spill over to weaker demand for US and other government bond markets, via less FX reserves accumulation, somewhat higher global yields and a stronger USD against a broad set of currencies.”