Economists at Commerzbank are seeing depreciation pressure for the Chinese currency over the coming year given the policy divergence between the People’s Bank of China (PBoC) and Federal Reserve (Fed) 

A weakening bias for CNY

“The Chinese economy is set to slow further as the property softness and Covid-induced consumption weakens remain the key drag. The economic growth is expected to slow to 4.5% in 2022, down sharply from about 8% growth in 2021.”

“A strong dollar due to policy tightening is likely to the main theme in the coming years. After the PBoC's recent rate cuts, the narrowing US-China yield differentials would pose downside bias to the Chinese currency.”

“We forecast 6.7 and 6.8 for USD/CNY at year-end of 2022 and 2023 respectively.”