Deutsche Bank: Upgrading RMB Forecast on Import Surge
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Deutsche Bank has upgraded its outlook on the Chinese yuan, citing an anomalously strong surge in imports that is expected to drive further currency appreciation this year. The bank revised its year-end 2026 USD/CNY forecast upward to 6.55 from 6.70, while maintaining its 2027 forecast at 6.30. If realized, this trajectory implies a 6.3% appreciation against the dollar and a 5% gain against a currency basket, marking one of the strongest annual performances for the yuan in two decades.
China's export growth remains robust, expanding 15% year-over-year in the first four months. However, US-dollar-denominated imports surged 23%, outpacing exports by 8 percentage points and compressing the trade surplus to 1.4% of GDP. Deutsche Bank identifies two primary, non-exclusive drivers behind this import strength: preemptive inventory accumulation for future export production and recovering domestic demand.
The import surge is heavily concentrated in AI-related products and upstream industrial inputs rather than crude oil. In the first quarter, chips, semiconductor equipment, and computers accounted for 40% of the incremental import value, while traditional industrial inputs made up another 30%. This structural shift indicates corporate restocking ahead of anticipated demand.
Regardless of the dominant driver, the macroeconomic implications point toward a stronger yuan. If external demand leads, export growth will eventually accelerate, expanding the trade surplus and boosting foreign exchange settlement. If domestic demand leads, growth and inflation will recover, forcing a repricing of liquidity and monetary policy away from current historic low rates.
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