Since the beginning of November 2022, the Chinese Yuan has appreciated by around 7.4% versus US Dollar. Economists at TD Securities expect further limited CNY appreciation vs. USD but expect CNY to underperform its peers.

CNY TW weakness to resume

“Clearly sentiment has turned for the CNY, but while we now expect further slight appreciation vs. USD to around 6.70 by end-2023 we also expect trade-weighted weakness in the CNY to resume.”

“We think the authorities will favour CNY TW depreciation to help maintain export competitiveness at a time when exports are likely to continue to weaken.” 

“We think the CNY will be undermined by a declining current account surplus as the services balance moves back into deficit due to a wave of Chinese tourists overseas.”