CNY: Pace of Appreciation Against USD Expected to Slow – ING

USD/offshore CNH has entered a consolidation phase after a notable decline last week, trading near 6.72285. Chris Turner, an analyst at ING, noted that market sentiment is turning cautious, and the pace of the renminbi's earlier rapid appreciation is expected to slow. This assessment is primarily based on investors' hesitation to chase further gains in the renminbi, as well as multiple constraints from policy and geopolitical fronts.

**Central Bank Fixing Adjustments Signal Stability Intent**

The People's Bank of China's recent operations are seen as a key signal of FX consolidation. According to ING analysts, the central bank has slowed the downward adjustment of the USD/CNY central parity rate. This move conveys a clear intention to avoid an excessively one-sided and rapid appreciation of the renminbi, favoring the maintenance of basic stability at a reasonable and balanced level. As the anchor for daily trading, changes in the pace of the fixing adjustment directly affect market participants' long-side enthusiasm.

**Geopolitical Risks Dampen Buying**

U.S.-Iran sanctions risks are another factor keeping investors cautious. Geopolitical tensions often heighten risk aversion, putting pressure on emerging market currencies, including the renminbi. Against this backdrop, despite the renminbi's previous resilience, investors' willingness to buy further at current levels has declined, with many opting to wait on the sidelines to avoid potential external shocks, providing short-term support for the USD/offshore CNH exchange rate.

**Institution Narrows FX Forecast Range**

ING has previously narrowed its USD/CNY forecast range for the rest of the year, reflecting expectations of increased two-way volatility and reduced room for one-sided appreciation. The institution's chief economist, Song Lin, has stated that despite the overall strength of the dollar, the renminbi remains one of the strongest currencies in 2026, but the momentum for further significant short-term gains is weakening. The market is awaiting new catalysts to determine the next breakout direction.