USD/CNY to drift lower to around 7.15 by year-end – MUFG

The Chinese Yuan extended losses against the US Dollar last month. Economists at MUFG Bank analyze USD/CNY outlook.

More upside for CNY than downside 

For the near term, factors like persisting large negative interest rate differentials over the US, a strong US Dollar more broadly and concerns over China’s property sector will weigh on CNY and keep USD/CNY around 7.30 in the near term.

Our views of the Chinese economy achieving this year’s annual growth target of ‘around 5’ and potential improving sentiment still point to a stronger CNY by year-end. 

We expect USD/CNY to drift lower to around 7.15 by the end of 2023.