The Yuan is seeing another leg of weakness against the US Dollar. Economists at UBS expect upward pressure on USDCNY to persist.

Pressure still up in USDCNY

“The Yuan is likely to stay weak in the near term, given macro headwinds and the large USD yield advantage.”

“The Chinese Yuan has been under pressure in part because of the disappointing pace of China’s recovery, as the government persists with its economically damaging zero-COVID policy. In addition, the continued divergence in US-China monetary policy and the subdued appetite for Chinese assets will see persistent, upward pressure on the USDCNY in the near term.” 

“Our guidance to hedge CNY long exposure into 1Q23 remains in place.”