From Goldman today:
…we shift to an outright negative view on the RMB, in line with this week’s Asia Views and our bearish RMB forecast… there is a weak link in China’s management of its currency.
To be sure, the government has clearly communicated a shift in focus to a trade-weighted currency basket, de-emphasizing the signal that the bilateral exchange rate versus the Dollar carries. But domestically, the only signal that matters is $/CNY, so that higher fixings could easily re-ignite capital flight, as households and firms anticipate a faster pace of depreciation.
