This morning, the PBOC increased its USD/CNY exchange rate, racing the way for a slightly weaker CNY, says Volkmar Bour, Commerzbank’s currency analyst.
The PBOC allows a slight weakness of the CNY despite a strong GDP
“The type of reference, around which the USD/CNY exchange rate is allowed to fluctuate within a range of 2%, was the highest since September 2023 and shows that the Chinese government can live with a slightly weaker currency, but wants to maintain relatively small daily movements so that the market does not develop too much impulse by itself.”
“When observing this morning’s economic data, one could forgive when thinking that a weaker currency is not needed at all. The growth of the GDP of the first quarter was surprisingly strong, with 5.4% year -on -year (expected 5.2%) and the monthly data of March also point to a good impulse. However, given the sharp climbing in the commercial war with the US what could be otherwise. “
“Therefore, it is expected that the CNY will continue to be promoted by political developments instead of economic. And since the division between the US and China seems to be hardening, a prolonged period of slight weakness of the CNY is more likely.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
