UniCredit: No Rebound Soon For CNY & RUB

UniCredit do not expect “another large drop in either the CNY or the RUB going forward, although the renewed USD strength is adding pressure again. At the same time, however, the two currencies are unlikely to rebound soon in our view.”

• “The crisis in China’s property sector, alongside still-weak domestic demand, falling exports and weak inflation offer no reason for Beijing to aim for a strong yuan.”
• “A drop in Russia’s current-account surplus and a rise in its budget deficit justify a weak RUB, but the CBR has to limit the impact of this on prices so as not to miss its 4% inflation target.”
• “A USD/CNY return below 7.00 has become even more of a story for 2024.”
• “We also expect USD/RUB to trade close to 100 this year and to rise to 115 by end-2024, as the CBR is set to return to easing policy to avoid recession.”