Economists at Credit Suisse expect the Chinese Yuan to continue weakening in the coming months.

Asia FX complex is likely to remain weak in the first part of 2023

“The Asia FX complex is likely to remain weak in the first part of 2023 given the resilient USD trend.”

“Some divergence across the region can be expected, depending on the various economies’ dependence on manufacturing exports. This is one key reason why the CNY is likely to weaken. The other is that imports are likely to accelerate as expansionary fiscal and monetary policy starts to feed through into the real economy in the months to come.” 

“With the CNY still 3%-4% above pre-COVID highs in trade-weighted terms, we expect Chinese authorities to be more than comfortable with a meaningful CNY depreciation.”

“Within the region, the IDR should prove more resilient in 2023, due to its trade surplus and attractive carry against the USD, which is among the highest in the region.”