China Weekly Recap: Modest Upside for Chinese Reserves

• Fitch Solutions expects more room to run for the nascent recovery in China’s foreign exchange reserves, which was extended for a third month in December 2018.

 

• Positive valuation effects from waning USD strength and a reduced need to support a stabilizing CNY are likely to outweigh subdued exports growth over the coming months.

 

• They are mildly bullish on the CNY in the short-term as positive sentiment could be bolstered further by an extension to the March 1 deadline for the U.S and China to agree on a trade deal.

 

(Source Fitch Solutions)