The People’s Bank of China (PBoC) wanted to slow down yuan appreciation, and it has had some success at this. USD/CNY has now stabilised at 6.37. In the first half of the year, the Chinese yuan is set to remain resilient thanks to inflows, according to economists at ING.

Portfolio inflows support yuan strength

“We expect the yuan to remain stable during the Chinese New Year despite the likelihood of more hawkish news from the US Fed.”

“Appreciation pressure on the yuan cannot be wiped out totally as portfolio inflows into the China onshore market are likely to continue the trend started in 2021.”

“We expect inflows will keep the yuan strong in 1H22.”