Analysts at Commerzbank explained that USD/CNY spiked to the weakest level since January 2017, reflecting the bearishness towards the economic and currency outlook.
“As such, there is increasing speculation that the PBoC will not be able to defend the 7 hurdle in USD-CNY in the coming months. “
“We do see rising risks that CNY could depreciate further from current levels.”
” However, Chinese authorities should think twice before giving up the critical threshold for USD-CNY at 7 too lightly as this could unleash forces that are even more difficult to control. “