Analysts at Credit Suisse continue to forecast a 6.30-6.40 trading range for USD/CNH in Q1 as the pair will not react meaningfully either to further Russia-Ukraine escalations or China’s slowing GDP.

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“Amid rising geopolitical tensions we think USDCNY and USDCNH will remain stable within a 6.30-6.40 range as China’s policymakers continue to manage FX volatility amid the growth slowdown.” 

“The consensus view in Asia is that China’s policymakers no longer wish to use yuan weakness as a policy tool to boost China’s trade and manufacturing competitiveness. Strong export and trade growth is one of the few bright spots amid weak China data indicators.” 

“Concern over China’s property sector persists. Credit sentiment in the property sector could remain weak, but we think the spillover onto USD/CNY will be minimal. China’s authorities will be careful to limit financial contagion amid continued financial press speculation about a ‘Lehman moment’ in China. USD/CNY stability is a critical policy tool in these efforts.”