CNY: Inflation recovery supports modest gains – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank’s Volkmar Baur sees growing evidence that China is exiting deflation, with consumer prices up 1.3% year-on-year in February and producer prices turning higher month-on-month. Rising services and food prices underpin this shift. As inflation improves, Baur expects no major PBoC rate cuts and maintains a forecast for slight CNY appreciation versus the US Dollar this year.

China price data point to deflation end

"There are increasing signs that China could see rising prices again this year."

"This gives hope that consumer prices will also establish themselves in positive territory in the coming months."

"Positive signals are also coming from producer prices, which rose again by 0.4% month-on-month. It appears that producer prices will also return to positive territory year-on-year in the coming months."

"The positive development in inflation makes it less likely that the central bank will adjust its interest rates this year."

"We therefore continue to expect a slight appreciation of the CNY against the US dollar this year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

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