×

CCTV Script 06/01/16

- This is the script of CNBC's news report for China's CCTV on January 4, Wednesday.

Welcome to CNBC Business Daily, I'm Qian Chen.

The Chinese yuan plunged to a five-year low in offshore trading and the gap between it and its mainland counterpart widened sharply on Wednesday.

this reflects growing expectations of further weakness in the currency as China's economy slows and capital outflows accelerate amid a stock slump.

The latest trigger for the slump came after the People's Bank of China

(PBOC) set the official dollar/yuan midpoint rate at 6.5314, the weakest fixing since 2011.

The fix represented a 0.22 percent decline from the previous session, a faster pace than witnessed recently.

Here at CNBC, we spoke to a variety of analysts regarding to the currency outlook, and one thing they agreed with... is that the YUAN is trying to move closer towards the fair value.

CLN STREET SIGNS 01_06_2016 1000

[Craig Chan Head of FX Strategy, Asia ex-Japan, Nomura] "104129 What I see is actually quite strong signals coming out that the authorities acutally want to move the currency closer towards fair value. (Martin: which will be?)which I think is around 6.80, 6.90 at this juncture. 104142"

However, Goldman sees it differently.

According to a report done by the bank, it says China's yuan has "limited" room for further depreciation as slumping oil prices will help boost the government's current account surplus and offset capital outflows.

"The yuan is essentially at fair value," the analysts wrote.

On the other side, analyst Divya Devesh from Standard Charted told CNBC earlier that they are not expecting future depreciation of the yuan.

During an interview, Devesh said the bank predicts the FED would only hike ONCE in 2016, compared to 2-3 times, which was widely expected in the market currently.

Paul Donovan from UBS added that a weaker euro would also limite yuan's depreciation, as the later is trying to reach its fair value on a "proper trade-weighted basis".

Some other currencies to check in the region... analysts see a weaker Yen, as the BOJ is expected to announce more stimulus measure in order to reach their 2% inflation target of the year. ALTHOUGH, dollar-Yen fell to a 3-month low earlier today, as instability in the Middle East as well as today's reports on North Korea's nuclear test led yen to attract buying, due to its safe-haven status.

However, on the fundamental basis, experts still see further depreciation pressure for currencies in Asia.

CLN STREET SIGNS 01_06_2016 1000

[Craig Chan Head of FX Strategy, Asia ex-Japan, Nomura] "104212 IF we are looking just within Asia itself, there are some economies and currencies which are very strongly interlinked with China. Particially Northeast Asia, Singapore, Malaysia. I think these are the ones probably most exposed to the depreciation of the currency.104229 "

CNBC's Qian Chen, reporting from Singapore.

Follow us on Twitter: @CNBCWorld

Contact Business

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    Get these newsletters delivered to your inbox, and more info about about our products and service. Privacy Policy.