USDCNY trades 1% above official fixing for first time
CNH and onshore CNY continued to weaken against USD as investors remained cautious about stops and potential unwinds of structured USDCNY shorts. The financial press has quoted that banks have sold as much as USD 350 bn of such products since the start of 2013, with USD 150 bn still outstanding. Estimates for the strikes at which these contracts were entered vary, but many market participants estimate the range of 6.20 – 6.30, the spot range from late 2012 through mid-2013. The current spot rate is now very slightly above the PBOC’s previous upper limit of 1.0% above the official USDCNY fixing. Although the 1.0% level was previously approached, the upper limit ensured 1.0% was never crossed until today.
Read the full report: UBS