CNH forward points remain well anchored - Westpac

Northbound flows were bigger than Southbound flows under Stock Connect for most of the recent days, resulting in a withdrawal of RMB from the CNH market, explains Frances Cheung, Research Analyst at Westpac.

Key Quotes

“CNH forward points remain well anchored for now, probably because of the relatively tight USD liquidity. But we watch out for any upside risk to CNH forward points should there be a tightening of CNH liquidity. Monthly inflows into onshore CNY bonds (those on Chinabond) reached a record RMB66.4bn during April. If these foreign investors brought RMB from offshore for their investment that would have a tightening impact on CNH liquidity as well.”