Commerzbank argues that structural export drivers are outweighing cyclical pressures on the Chinese Yuan, giving the currency a more resilient foundation than recent market volatility suggests. The bank points to China’s strong manufacturing and export sectors as a persistent source of foreign currency inflows, which helps support the yuan even when global interest-rate cycles or risk sentiment shift. This structural support may also reduce pressure on the People’s Bank of China to intervene defensively, because the trade surplus provides a natural buffer.
In a separate note, OCBC expects the yuan to appreciate in a measured manner against the US dollar, supported by China’s trade surplus, foreign portfolio inflows, and the ongoing internationalization of the RMB. However, OCBC warns that two-way risks remain prominent. A potential resurgence in US inflation, a more hawkish Federal Reserve, trade frictions, and geopolitical tensions could trigger renewed depreciation pressure. The bank advises traders to buy dips in USD/CNH rather than chase strength, while maintaining hedges. Key levels include the psychological 7.00 handle; a break below could accelerate appreciation, while a move above 7.20 would signal renewed depreciation pressure.
Both assessments suggest the yuan has meaningful underlying support, but its path is unlikely to be one-directional. Market participants should monitor China’s economic calendar, including GDP data, PMI readings, and the PBOC’s daily fixing, for signals on policy intent and currency direction.
