According to OCBC FX Strategists Sim Moh Siong and Christopher Wong, the Chinese Yuan (CNY) has appreciated by 3.3% against the US Dollar so far this year, outperforming other Asian currencies and showing strength on the CFETS basket, which is now approaching its early-2025 highs [1]. The strategists attribute this performance to robust external demand and increased corporate foreign exchange conversion, noting that the Yuan has managed to strengthen despite negative terms of trade resulting from high oil prices [1].
OCBC observes that Chinese authorities appear comfortable with the Yuan's further appreciation, viewing it as a means to support the internationalisation of the Renminbi and address concerns about undervaluation [1]. However, the strategists caution that while currency gains are expected to continue, the pace will likely be measured, especially in the near term due to the dividend payment season, as well as ongoing soft domestic demand and China's reliance on exports [1].
No specific market reactions or analyst forecasts beyond OCBC's measured outlook are mentioned in the article [1].
CONCLUSION
The Chinese Yuan has demonstrated notable strength in 2024, driven by solid external demand and corporate FX conversion. While authorities seem to support further appreciation, OCBC expects gains to be gradual due to domestic and seasonal factors. Market participants should anticipate a continued but measured appreciation path for the Yuan.