Beijing lockdown fears hit markets. The Chinese yuan has lost around 3% versus the US dollar over the past week, dropping to a one-year low. Economists at ABN Amro have raised their USD/CNY end-2022 forecast to 6.60 from 6.30 previously.

PBoC remains hesitant to ease monetary policy more broadly

“The broadening of lockdowns is exacerbating headwinds to China’s economic growth and is adding to supply bottlenecks, with spillovers to global supply chains. We have already cut our near-term growth forecasts for China, with risks still tilted to the downside. Our annual growth forecast for 2022 (5.0%) is already 0.5 pp below Beijing’s growth target of 5.5%.”

“The People's Bank of China remains hesitant to ease monetary policy more broadly, with other major central banks on a hiking path.”

“While we still think that the authorities will not allow a disorderly depreciation, we have adjusted our end-2022 forecast for USD/CNY to 6.60 (from 6.30).”

See: USD/CNY to advance nicely towards 6.80 by year-end – TDS