Stronger US in the light of risk aversion to exert downward pressure on RMB – Natixis

FXStreet Insights Team FXStreet

The renminbi has acted as safe haven, especially in the first days of the Ukraine conflict. Amid a general risk-off environment, a stronger US dollar could leave the Chinese currency under downward pressure, economists at Natixis report.

Limited short-term impact of the Ukraine crisis on the Chinese economy, but much wider indirect effects to be expected

“We expect the short-term impact of the Ukraine crisis to be limited for China, except for the soaring energy prices which China can still maneuver.”

“The indirect – and possibly longer-term – impact is not easy to gauge as it will affect many dimensions of the global economy and many assumptions are needed to be made on the scenario in which China will be facing.”

“The upcoming Two Sessions (Lianghui), starting from 4th of March, should give more hints as to the extent of the stimulus China’s leadership is willing to push and will influence the course of the RMB. Still, a stronger dollar in the light of pervasive risk aversion may exert downward pressure on the RMB over longer-term.”

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FXStreet Insights Team

FXStreet

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