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China: Initial impact of CNY devaluation shock, reversing - MUFG

FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, notes that the main trend in the foreign exchange market heading into today’s FOMC meeting is the ongoing reversal of the initial impact from the renminbi devaluation shock.

Key Quotes

“The onshore renminbi is continuing to gradually rebound having reversed around a third of the decline recorded on the 11th and 12th August. The South Korean won and Singapore dollar have rebounded even more impressively from their recent lows with the won having staged almost a full recovery.”

“However, the reversal in Asian currencies has on average lagged other groups of currencies. The Indonesian rupiah, Vietnam dong and Indian rupee all remain close to their recent lows.”

“Latin American currencies and EMEA currencies have on average reversed around half of their initial adjustments against the US dollar following the renminbi devaluation.”

“The Chilean peso, Colombian peso and Russian rouble have staged the largest reversals supported by the rebound in the price of copper and crude oil. In contrast, the reversals for the Brazilian real and Turkish lira are lagging as they remain close to recent lows.”

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