As the People’s Bank of China (PBoC) easing is brought forward to offset the impact of lockdowns, analysts at Credit Suisse expect USD/CNH to rise gradually in a 6.35-6.55 range in Q2.

PBoC easing is brought forward to offset the impact of lockdowns

“The continuation of President Xi’s strict ‘zero-COVID’ approach point to weaker manufacturing activity and an uneven recovery in consumption. The ongoing lockdowns point to weak March data, and make a 5-10 bps rate cut in mid-April more likely.”

“Further PBoC rate cuts are marginally positive for USD/CNH, though we think outflows from China will be moderate, given capital controls remain in place.” 

“Weaker euro and yen amid Fed tightening and the prospect of new sanctions on Russia also point to higher USD/CNH.” 

“We expect USD/CNH to rise gradually in a 6.35-6.55 range in Q2.”