HKD/CNY Outlook:
The HKD/CNY exchange rate is likely to decrease as it is currently 2.0% below its recent average and near recent lows. Continued pressure from HKMA interventions and external market factors are influencing this trend.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority is actively buying HKD to support its value, while the People's Bank of China is focusing on establishing stable exchange rate practices for the yuan.
• Risk/commodities: Current volatility in global oil prices can affect the HKD as fluctuations can impact trade and economic activity in Hong Kong.
• One macro factor: China's recent economic performance shows stronger growth than expected, which could bolster CNY against the HKD.
Range:
The HKD/CNY pair is likely to drift within its recent stable range, testing the lower bounds but remaining above recent extremes.
What could change it:
• Upside risk: A significant easing of US Federal Reserve monetary policy could strengthen the HKD.
• Downside risk: Continued weak performance in Hong Kong's economic indicators could further weaken the HKD.