Societe Generale analysts flag that CNY is on course to test 6.80 for the first time in three years, even as the People's Bank of China (PBoC) moderates the pace of appreciation via weaker fixings. Robust domestic savings are supporting Chinese government bonds, while stronger‑than‑expected first‑quarter growth and a solid export performance underpin the Yuan despite softer recent activity data and easing CPI inflation.

Yuan strength backed by savings and growth

"CNY on track to test 6.80 for the first time in three years even as the PBoC manages the pace of yuan appreciation by weaker fixings."

"Rates continue to outperform Western peers, with the 10y CGB yield slipping below 1.79% (200dma)."

"China’s $51trn domestic savings pool is supporting demand for local debt while a basket of CNY high‑grade bonds tops Bloomberg global FI aggregate YTD (+~1.1%)."

"On the macro front, 1Q growth surprised to the upside, accelerating to 5.0% yoy vs 4.5% in 4Q."

"1Q exports still ran a solid growth clip of 14.7%."

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