Nomura lowered its confidence in shorting the US dollar against the offshore renminbi from the highest level of 5 to level 4 and revised its year-end exchange-rate target from 6.50 to 6.55; it still expects the renminbi’s medium-term appreciation trend to continue if additional intervention is limited.
Nomura estimates that, with the countercyclical factor included, the forecast USD/CNY central parity rate is 6.6819, 327 points below the previous fixing; the two model results differ by 317 points.
Nomura raised its conviction in a short USD/CNH trade from 4/5 to 5/5, forecasting an exchange rate of 6.50 at year-end. Corporate foreign exchange conversion, year-end seasonality and the policy environment are its main grounds.
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.
Nomura expects the USD/CNY fixing to be 471 points lower than the previous fixing, but only 2 points below the previous official spot close; including the countercyclical factor, the forecast is 6.6910, down 270 points from the previous fixing.
