Economists at Commerzbank forecast CNY to appreciate mildly through this year due to the earlier-than-expected Covid reopening and the expectation of more market-friendly economic policies.

Yuan gains appeal

“The Covid policy U-turn has actually improved the growth outlook for this year. Once the infection waves are over, economic activity could return to normal in the second quarter or even as early as March.”

“A shift in the government’s economic policy is contributing to a better outlook for this and next year. The government is keen to restore confidence.”

“The PBoC will optimize expectation management to maintain CNY exchange rates at a ‘reasonable equilibrium level’.”

“Due to the earlier-than-previously-expected Covid reopening and an expected peak in the Dollar strength, we now forecast CNY will continue to appreciate mildly through this year.”