February 5, 2024 – The USD/CNH currency pair experienced a brief surge above 7.2000, prompting economists at CIBC Capital Markets to delve into its future trajectory.
Despite ongoing reports of state banks selling USD in the spot market to defend the onshore Yuan, CIBC Capital Markets anticipates modest relief in the form of a slight downside to 7.2000 and 7.1500 in the third and fourth quarters of this year, respectively.
The analysis suggests that USD/CNH is likely to peak near 7.2500 before experiencing this subtle downturn. The Yuan’s performance is expected to be influenced by USD weakness, albeit to a lesser extent compared to its North Asian counterparts, specifically the Japanese Yen (JPY) and the South Korean Won (KRW).
As the market dynamics continue to evolve, CIBC Capital Markets provides a nuanced perspective on the USD/CNH pair, emphasizing the potential for limited relief in the coming quarters against the backdrop of reported interventions by state banks and the broader influence of USD weakness on the Yuan.
