China's trade figures for March clearly illustrate the sluggish domestic demand due to endless lockdowns. Therefore, the Chinese yuan is set to weaken over the next couple of quarters, economists at Commerzbank report.

Sluggish domestic demand

“While the export figures still look resilient thanks to buoyant global demand, import growth missed the market expectations by a huge margin. Obviously, the virus lockdowns are the major factor of sluggish imports as many people have to stay at home and can't buy durable goods.”

“As the lockdowns are likely to continue in Shanghai, the consumption and services sector will remain under pressure to weaken, further clouding the growth prospects.” 

“The weakening economy points to softness of the Chinese currency over the next couple of quarters.”