The Chinese yuan has fallen sharply over recent sessions versus the US dollar. Further depreciation is expected in the months ahead but a sharp slide in the currency is unlikely, economists at TD Securities report.

Downside risks to CNY in the months ahead

“Over the near-term, pressure on the CNY is likely to remain in place, with the authorities appearing to condone the recent move in the currency as it provides another channel of stimulus.” 

“In the near-term, the 23.6% Fib resistance level around USD/CNY 6.6028 will be the immediate focus while a break of this level could see a test of the 50% Fib level around 6.7139.” 

“We expect the pace of CNY depreciation to slow eventually and now expect USD/CNY to reach 6.80 by end-2022 from 6.45 previously.”