USD/CNH WILL SET SLIGHTLY HIGHER AT A RATE OF 7 – RABOBANK

Economists at Rabobank expect USD/CNH to settle around the 7 level.

PBoC to set interest rates slightly lower in order to stimulate the economy

“The current low level of price increases in both producer and consumer prices has increased the chance that the PBoC will set interest rates slightly lower in order to stimulate the economy. Therefore, we include again our earlier expectation of slightly lower interest rates which we argue will set USD/CNH slightly higher at a rate of 7.”

“We expect the PBoC 7-day reverse repo rate and the PBoC 1-year Marginal lending facility to be at respectively 1.90% and 2.65% at the upcoming PBOC meeting of 21st of May.”