All eyes on USD/CNY - Moves in the CNY are having a big impact on the Chinese equity market, and while most feel the big falls in the A50 cash and CSI 300...

All eyes on USD/CNY - Moves in the CNY are having a big impact on the Chinese equity market, and while most feel the big falls in the A50 cash and CSI 300 were down to talk of Chinese investment banks curbing lending to the property space, the moves in CNY also are having a major impact. A number of institutions within China have issued a sizeable amount of USD denominated debt, hoping the pair would continue to weaken and thus benefit from CNY appreciation; however that is not happening, so there would be many sitting on some sizeable losses right now. Some see the recent weakness in the CNY as a political message, with US President Obama meeting with the Dalai Lama, while some just see the CNY mirroring the increased liquidity in the money markets (as seen with the seven-day repo falling of late).