Analysts at the financial giant Goldman Sachs reportedly think the onshore Chinese yuan (CNY) will rise against the dollar over the next 12 months.
One US dollar is currently worth 7.2 CNY (USD/CNY), but Goldman forecasts that number will fall to 7.0 yuan per dollar over the next year, Bloomberg reports.
-->A falling USD/CNY chart indicates that the yuan is appreciating against the dollar.
Explain the investment bank’s analysts,
“The undervalued levels of the currency, both on a real trade-weighted basis but especially versus the dollar, all point to the possibility for a stronger onshore yuan as a potential offset to tariff reductions.”
The analysts had previously predicted the yuan would be at the 7.35 level over 12 months.
The CNY is up 1.24 against the USD in the past month and 0.31 in the past five days.
Analysts at BNP Paribas Asset Management echo Goldman and also predict the CNY will surge in value against the USD, according to Bloomberg.
Rick Cheung, a fixed income portfolio manager at BNP, tells the news outlet that the yuan will have additional upside if the dollar continues to depreciate.
“If China’s growth in the end surprises the market to reach let’s say more than 5 and even 5.5, it’ll also provide a very good uptake potential.”
China utilizes an onshore yuan (CNY) for domestic commerce and an offshore yuan (CNH) outside the mainland.
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