Economic downturn the yuan against the dollar to see under 7
Posted by Emvertex
Global asset management (DWS) said on March 11 that the yuan will still fall against the dollar this year as China’s economy has not yet stabilized, and it expects the yuan to remain at 7 yuan to the dollar for a year.
March 11, according to Reuters news, DWS (former deutsche asset management) Asia Pacific investment director Sean Taylor has said at the press conference: “the recent relatively strong, due to the vision will have more capital market cycle and shenzhen port flux and bond market channels into the territory of China, and start on the RMB exchange rate prediction, but investors don’t ignore the basic factors of the yuan, is China from trade surplus to a trade deficit of factors make the weak yuan.”
Against the yuan, Taylor said the dollar is flat this year and will weaken in the longer term, which is good news for non-dollar assets.
The renminbi may be overvalued against the dollar, according to data released yesterday by nomura, the international investment bank.
The latest round of monetary and credit easing by communist party authorities may push the yuan further into overvalued territory, according to freedom times. Nomura expects the yuan to eventually weaken against the dollar “in the medium to long term,” but it did not disclose the extent of the depreciation.
Bank of America merrill lynch and ubs, the international investment Banks, both downgraded the renminbi against the dollar in February.
According to bank of America merrill lynch, the latest forecast is for the yuan to fall to 6.85 in the first quarter and 6.9 in the second quarter, before gradually weakening in the second half of the year and weakening to 6.95 in the third quarter and 7.0 in the fourth quarter.
“The three-month forecast is 6.9, the six-month and 12-month forecast is 7.0,” ubs said in a note.
As for the reasons for the depreciation, ubs said that China’s economic growth slowdown, current account deterioration and loose policy fundamentals all point to the general trend of weaker renminbi.
On China’s recent stock market rally, Taylor attributed the improvement to an improved investment climate, especially a change in interest rate expectations and good progress in trade talks, rather than an improved economy. “The current rally is purely driven by the investment climate and what will drive investors into the market will be the earnings outlook for the second half of the year and a return to economic stability,” he said. But because the rise is too fast, the mainland stock market faces the short – term pullback pressure.