Chinese Yuan: Gradual appreciation with trade pressures – MUFG
MUFG’s Lee Hardman notes the Chinese Renminbi has outperformed the Euro against the Dollar, with USD/CNY hitting a year-to-date low near 6.6900. PBoC’s lower daily fixes have supported trade‑weighted CNY gains.
The Chinese Renminbi has displayed a gradual appreciation against the US Dollar, with the USD/CNY pair reaching a year-to-date low of approximately 6.6900. The People's Bank of China (PBoC) has set lower daily fixes for the USD/CNY exchange rate, contributing to the Renminbi's gains in trade-weighted terms. This trend has persisted despite the broader strengthening of the dollar, as it has outperformed the Euro against the dollar.
European concerns over China's widening trade surplus and the new caps on hybrid vehicle exports are expected to maintain pressure for gradual Renminbi appreciation. China has successfully redirected its trade away from the US to other Asian countries and Europe, further fueling its currency strengthening. Policymakers in China are under growing external pressure to continue the Renminbi's gradual strengthening to mitigate the adverse effects on trade.
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