CNY will likely remain under pressure before economic data show that China’s growth momentum turns around and picks up speed, albeit likely just modestly so. In the meantime, the PBoC will continue to defend the Yuan.

We expect USD/CNY to continue to stay at around 7.30 in the near term before easing somewhat towards the end of the year. Longer out, we expect USD/CNY to fall below 7.00 in 2024 due to the expectation of a softer USD as we anticipate the Fed to cut its key interest rate next year.

EUR/CNY will hold up for a few quarters, benefiting from the ECB’s restrictive monetary policy for some time ahead.