14 Mar 2014
Flash: Further CNY appreciation lies ahead 0- Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, sees the likeliness of the CNY to gather steam in the medium term.
Key Quotes
"CNY has appreciated dramatically in real terms over the last decade, relative to the US dollar, the rest of the Asian currency block as well as the Euro and yen. Of itself that isn't disastrous, because as China's economy develops at a break-neck pace, a strengthening real exchange rate makes sense."
"This isn't the same as the over-valuation of the NZD, AUD or CAD, which are countries that simply benefited from a commodity boom and crazy Fed policy. Nor is it the same as the RUB appreciation, which comes to a country where productivity and output/capita haven't been so exciting as the development of the country's energy resources".
"But China is a lot less competitive than it was, and weakening in other developing economies' currencies is bound to have an impact on appetite for this real CNY appreciation to continue."
Key Quotes
"CNY has appreciated dramatically in real terms over the last decade, relative to the US dollar, the rest of the Asian currency block as well as the Euro and yen. Of itself that isn't disastrous, because as China's economy develops at a break-neck pace, a strengthening real exchange rate makes sense."
"This isn't the same as the over-valuation of the NZD, AUD or CAD, which are countries that simply benefited from a commodity boom and crazy Fed policy. Nor is it the same as the RUB appreciation, which comes to a country where productivity and output/capita haven't been so exciting as the development of the country's energy resources".
"But China is a lot less competitive than it was, and weakening in other developing economies' currencies is bound to have an impact on appetite for this real CNY appreciation to continue."