Short USD/CNH: Strong trade inflows and potential DeepSeek 2.0-related inflows

Research evidence excerpt

Short USD/CNH: Strong trade inflows and potential DeepSeek 2.0-related inflows

Global Markets Research

21 July 2026Strategy Trade

Foreign Exchange - ASEAN/Asia ex-Japan

Research AnalystsShort USD/CNH: Strong trade inflows and

Asia FX Strategypotential DeepSeek 2.0-related inflows

Craig Chan - NSL

RMB supportive factors include robust trade settlement, asymmetric sensitivity craig.chan@nomura.com

to USD downmoves, potential foreign inflows and stable US-China relations. +65 6433 6106

Trade: We maintain a conviction level of 3/5 on our short USD/CNH position, targeting Wee Choon Teo - NSL

6.55 (~3.0% gain) by end-October. weechoon.teo@nomura.com

+65 6433 6107We raised (on 16July) the conviction level on our short USD/CNH recommendation to

3/5 (from 2), as we are leaningtowards a near-term softer USD view following the Vicky Chen - NSL

release of weaker-than-expected US June CPI and PPI data. Although there are still a few vicky.chen1@nomura.com

+65 6433 6540factors limiting USD’s potential downside (i.e., renewed US-Iran attacks, inflows into US

assets etc.), local developments should continue to support our CNH appreciation view. Manthan Shingala - NSL

manthan.shingala1@nomura.com

Drivers of CNH outperformance +65 6433 6427

1. A continuation of robust onshore Chinese corporate FX repatriation following

the large trade surplus in June. We believe Chinese corporate FX selling activity is

likely to remain strong in coming months, especially with still-elevated exportgrowth

supporting a very large trade surplus.

○ Latest June data on net FX trade settlement by Chinese corporates showed a

surplus of USD81.8bn (May: USD53.6bn; Q2 average: USD61.0bn), which was

equivalent to a robust 92.9% of the trade surplus after adjusting for RMB

settlement (Figure 1).