As Federal Reserve-People’s Bank of China monetary policy divergences continue, the renminbi should continue to weaken into early 2023. Therefore, economists at Wells Fargo forecast USD/CNY at 7.40 by the end of the quarter.

Additional PBoC easing as well as weaker Chinese currency 

“Our below-consensus view on China's growth prospects for the next few years leads us to believe further easing via Reserve Requirement Ratio (RRR) cuts is imminent.” 

“Additional PBoC easing would further place the direction of local monetary policy at odds with the trajectory of Fed monetary policy. These diverging paths for monetary policy should widen interest rate differentials in favor of the US dollar and place depreciation pressure on the renminbi through the end of this year.”

“We believe the USD/CNY and USD/CNH exchange rates can trend toward 7.40 by the end of Q4-2022 before experiencing a modest recovery over the longer term.”