Lower rates and disappointing economic data have resulted in a sharp depreciation of the Yuan. The accelerated pace of Yuan weakening lead economists at Rabobank to revisit their FX forecast.

Modest and gradual strengthening of the Yuan against the Dollar in Q4

We now expect USD/CNH to top around 7.30 during the third quarter in anticipation of worse-than-expected economic data. 

During the last quarter of this year, we see a modest and gradual strengthening of the Yuan against the Dollar, bringing the currency pair back to 7.25, since we expect markets to price in Fed rate cuts for the second quarter of next year.