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HSBC Sees Change to CCF As A Signal That CNH Strength Not Desirable

CHINA FX

HSBC's thoughts on China removing the counter-cyclical factor from the setting of USDCNY fix:


  • Sees the removal of the CCF as sending a clear signal that raging appreciation is not desirable.
  • They note that there has been no material fix level impact from the countercyclical factor recently because it is asymmetric (it kicks in when CNY is depreciating, but the currency has been in an appreciation phase).
  • This likely means the CNH is just a USD trade now. A close above 96 in the CFETS would signal something has changed.

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