RMB-USD spot price to depreciate 2-3 pct: HSBC
Xinhua, February 3, 2015 Adjust font size:
The spot price of the RMB against the U.S. dollar will depreciate 2-3 percent in 2015, HSBC forecast on Tuesday.
It said in a report that the depreciation range will be acceptable for Chinese policymakers in the face of a strong dollar, and will not derail their plan to make the RMB a more global currency.
The spot price against the U.S. dollar weakened 87 basis points to 6.2597 on Monday, the lowest closing price since Oct. 16, 2012.
The dollar's strengthening has piled pressure on the RMB. Onshore demand for dollars remains strong, which reflects importers' foreign exchange hedging needs and corporates repaying external debt, HSBC said.
The bank has been predicting RMB weakness against the dollar since the end of last year, but it is happening faster than expected due to aggressive quantitative easing by the European Central bank and a sharp drop in the Euro.
The report also attributed the depreciation to the weakening manufacturing sector.
Chinese manufacturing activity continued to wane in January as the manufacturing purchasing managers' index (PMI) dropped below the 50-point mark for the first time since October 2012, marking increasing downward pressure on the economy.
Official data placed the PMI at 49.8 in January, lower than December's 50.1. A reading above 50 indicates expansion, while a reading below 50 represents contraction. Endi