USD/CNH continues to edge lower, a trend that began even before broader US Dollar (USD) weakness, as exporter flows and possible portfolio inflows support the renminbi, ING's FX analyst Chris Turner notes.

Beijing allows steady RMB strengthening

"We see USD/CNH continuing to grind lower. This had been happening even before a clear move lower in the dollar. We're not sure whether it relates to foreign portfolio inflows into China or just Chinese exporters finally offloading their export earnings. Yet local authorities have had USD/CNY fully under control this year and are clearly allowing this renminbi appreciation."

"Here, we think they might be favouring a stronger CNY to support domestic demand, as they shift away from their long-held export model. Our team sees USD/CNY heading down to the 6.90 area next year."