Dollar-Yuan:### POV: USDCNY TO BREAK.......>

CHINA FX: Dollar-Yuan:### POV: USDCNY TO BREAK BELOW 6.20?

-Market sentiment to USDCNY continues to weaken and it could drop below the key

6.20 level if the dollar index (DXY) falls below 87.6

-The PBOC continues its tolerance to the sharp appreciation. Yuan central parity

rate stood at 6.2882 on Wednesday, having surged 2460 pips YTD.

-Strong positive market sentiment on long-term yuan appreciation has not formed

yet. The dollar demand from market players has increased at lower levels.

-The PBOC's stance on liberating the yuan exchange rate is, in the short term,

still ambiguous. It is likely to step in by restarting the counter-cyclical

factor if the trade surplus narrows at a fast pace.

-Expectations of a strong yuan would attract more inflows via both direct

investments and portfolio investments. Some of this could be hot money from the

regulators' perspective and could trigger a reaction.