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Global investment banks have raised their forecasts for the Chinese yuan this year on expectations that the country's economic reopening and Beijing's decision to relax property sector curbs will trigger strong capital inflows.
The bullish forecasts follow Beijing's adjustment from its zero-COVID strategy in early December and reversion to pro-growth policies to restore investor confidence and prioritize domestic demand.
"China's reopening and visible policy shift toward the property sector has lifted the yuan's outlook, and there could be more upside in the medium term," said Lemon Zhang, FX strategist at Barclays.
On average, the forecasts are for the yuan to end 2023 at 6.5 per dollar, a 3.6-percent rise from current levels. It has already surged more than 7 percent from the trough hit in late November to 6.7 per dollar on Wednesday, up about 2.2 percent year to date.
Other investment houses – including Goldman Sachs, HSBC, UBS, and Standard Chartered – also projected a stronger yuan.
"While asset markets have already priced in a meaningful improvement, we expect reopening to continue to lift Chinese asset prices, with the most upside in equities and credit," analysts at Goldman Sachs said in a note.
On Monday, Chinese Premier Li Keqiang stressed the importance of enhancing the role of finance in stabilizing the macroeconomy and improving financial services to keep the economy performing within a reasonable range.
(Reuters with edits; Cover image via CFP)
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Disinformation report hotline: 010-85061466