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The CNY appreciated by almost 7% last year versus the USD. Strong growth and high interest rate to push the Chinese yuan to further appreciate, Jianwei Xu from Natixis, reports.

Key quotes

“As long as global growth (mainly in China and in the US) is improving on the back of vaccines and fiscal stimulus, the dollar will depreciate to the profit of most currencies but particularly the CNY as it is supported by a strong growth.”

“Currently the PBoC would like to stabilize its currency but it would be complicated given current inflows following the inclusion of China bonds in the global bond index. Also, China is not likely to strongly intervene in the forex market as indicated in the Phase 1 agreement with the US.”

“The USD will continue to depreciate this year against most currencies and particularly the CNY as the USD/CNY could fall towards 6.30 in one year.”