USD/CNY has moved higher since the beginning of April. Economists at MUFG Bank retain a bullish outlook for the pair and forecast USD/CNY at 6.45 by the end of the second quarter.

Renminbi to be respond to the sharp narrowing of the yield spread

“The ongoing Ukraine war will very likely bring China lower exports growth and a narrower trade surplus reflecting weaker external demand and higher commodity prices that increase the import bill.”

“Negative yield spreads and poor domestic economic fundamentals will eventually play a more important role in deciding the movement of USD/CNY.”

“We expect USD/CNY to reach 6.45 by the end of Q2.”