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. Growing European unease over China’s widening trade surplus and new caps on hybrid vehicle exports are expected to keep external pressure for gradual Renminbi strength.

Renminbi supported as trade shifts

"Unlike the euro, the Chinese renminbi has been holding up better against the US dollar even as it has strengthened broadly."

"Upward momentum for the renminbi has been encouraged by the PBoC setting lower daily fixes for USD/CNY over the past month even as the dollar index has strengthened by around 4%."

"It has resulted in the renminbi hitting fresh year-to-date highs on a trade-weighted basis."

"China has been able to successful shift trade away from the US to other Asian countries and Europe."

"Building unease over China’s record trade surplus will keep external pressure on Chinese policymakers to allow the renminbi to continue to strengthen gradually to limit the negative impact on trade."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

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