Chinese Yuan to be more market oriented going forward

The PBoC surprisingly spiked the USD-CNY fixing by 1136pips or 1.86% tonight to 6.2298, the biggest daily deprecation since 1994. While the weak trade figures should have pushed the USD-CNY fixing to the weak side, this move is still quite out-of-consensus. 

The fixing rates have been hovered around the 6.12 level since April. This is due to the operational issues regarding RMB's inclusion into SDR. The IMF mentioned in the divergence of the CNY-CNH, the short trading hour of CNY and illiquid onshore rates market is the technical issues that make it difficult for the routine operation of SDR, such as calculation of exchange rate and interest rate. 

"From this perspective, the CNY exchange rate will be more market-oriented going forward, and the volatility of both CNY and CNH will pick up significantly. We also need to eye on the impact on Asian currencies. The Asian currencies would be under pressure in the foreseeable future", says Commerzbank.