USD/CNY to weaken towards 6.50 by year-end – ABN Amro
|Since June, the yuan has rallied strongly versus the US dollar. Georgette Boele, Senior FX & Precious Metals Strategist at ABN Amro, has subsequently changed her USD-CNY view and now forecasts the pair at 6.50 by the end of 2020.
Key quotes
“We long held the view that the yuan was on a long-term depreciation path versus USD. We have changed this view. We are now more optimistic on the outlook for the yuan in the medium to long term. That is because we expect general dollar weakening next year because of negative real rates in the US and a very accommodative Fed for years to come.”
“The yuan will gradually start to play a more crucial role in financial markets and central bank reserves, although this is not a process of years but of decades. That said, we believe that upside potential is limited in the near term, as the US will do a growth catch-up and markets may be a bit too optimistic on US-China relations under a Biden-administration.”
“Our new USD/CNY year-end forecasts for 2020 and 2021 are 6.50 (was 6.75) and 6.40 (was 7.00), respectively.”
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