China’s central bank should continue to lean against the Dollar’s rise versus the Yuan. The Chinese currency could come under further pressure into the end of this year. We still think the exchange rate with the Dollar could trade in a wide range for a while. However, there are early signs that growth in China is stabilizing. The central bank has also indicated it is averse to an excessive depreciation of the currency, saying in a statement that foreign exchange market participants should ‘resolutely avoid behaviors that disturb market orders such as conducting speculative trades.’

We forecast the USD to end 2023 at 7.40 versus the Yuan, easing to 7.20 by March next year and to 7.00 by September 2024.