CNY under pressure due to capital outflows

PBoC set the USD-CNY fixing rate at 6.3969 this morning, compared with the previous fixing of 6.3912. Both CNY and CNH exchange rates were narrowly range traded last Friday and this morning.

Ma Jun, chief economist of PBoC, said over the weekend that the CNY exchange rate will probably move in both directions in the future, following last week's devaluation, says Commerzbank. 

In addition, FX purchase positions on the balance sheet of PBoC dropped by CNY308bn in July, the biggest decline in record. This signals that the central bank stepped up intervention to stabilize the CNY exchange rate in July. In general, CNY is still under pressure to weaken due to strong capital outflows, adds Commerzbank.