We don’t expect the renminbi to weaken much further

Despite the recent slowdown in China’s reopening recovery, we don’t expect the renminbi to weaken much further against the US dollar. Yield differentials should begin to tilt back in favour of the renminbi as the Fed turns towards interest rate cuts later this year, and we think recent pessimism about China’s growth prospects will prove overdone. That said, slower growth domestically and overseas should limit any upside. The upshot is that we are maintaining our forecast for the renminbi to end the year at 6.9/$.