Nomura model forecasts a 460-point cut in the USD/CNY central parity rate; counter-cyclical factor narrows the decline
Nomura’s model forecast for the central parity rate on 28 October was 6.6711, 460 points below the previous fixing; with the counter-cyclical factor included, the forecast rises to 6.6923.
Original source：Nomura Singapore Ltd.First published on Unhidea：Original source date：
Key takeaway
Nomura’s model indicates considerable room for a lower USD/CNY central parity rate compared with the previous fixing, but including the counter-cyclical factor narrows the forecast decline from 460 points to 248 points.
How does the model expect the central parity rate to change?
Nomura’s model forecast for the USD/CNY central parity rate on 28 October was 6.6711, compared with the previous fixing of 6.7171, a forecast cut of 460 points. A lower USD/CNY quote means that the same 1 US dollar corresponds to fewer yuan.
Using the official spot closing rate of the previous trading day as the comparison instead, the model forecast is 31 points higher. The two comparisons point in different directions because the previous central parity rate and the previous day’s spot closing rate were themselves at different levels.
How does the forecast change when the counter-cyclical factor is included?
With the counter-cyclical factor included, Nomura’s model forecast is 6.6923, 248 points below the previous central parity rate.
The two forecasts differ by 212 points: including the factor makes the forecast central parity rate higher than the 6.6711 forecast without it, and also narrows the projected decline from the previous fixing.
Which other overnight currency movements does the model track?
Nomura listed four currencies with the largest overnight weighted contributions to the forecast change when the counter-cyclical factor is excluded: the euro, Mexican peso, Japanese yen and Russian ruble. They provide a reference for observing movements in the model; the chart text does not give confirmable figures for their individual contributions.
The report also shows recent model errors without the counter-cyclical factor and daily changes in the USD/CNY central parity rate, providing historical context for movements in the model and the fixing.
