Yuan Price Targets: BoA Asks What Happens At 8:1?

ZH: "What If China Devalues To 8?" BofA Warns Of "Profound" Consequences For Commodities, Financial System

Our Asia strategy team points out news reports that some Chinese government agencies are planning on the assumption of USD/CNY at 8.0 for the end of 2016. This would be a 20% devaluation back to 2006 levels. Considering the major impact of the 3% devaluation this August, the implications for EEMEA would be profound. Asset prices of commodity exporters would again suffer the most, as they have done since 10 August. Potentially even more damaging would be risk of financial contagion throughout the global banking system.

Potentially profound impact on commodities and through banks channels The long-term CNY/commodity relation implies potentially significant further downside in such a scenario, though one should not go so far as to extrapolate from this August. The bad news: assuming the broad commodity indices follow CNY back to 2006 levels in USD terms, the downside could be 25%