Chinese yuan seen firmer at 6.5 vs. dollar over next 12 months – Goldman Sachs

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In an interview with CNBC’s “Squawk Box Asia” on Thursday, Timothy Moe, co-head of Asia Macro Research and Chief Asia-Pacific Equity Strategist at Goldman Sachs, believe that the onshore Chinese yuan is expected to strengthen vs. the US dollar in the coming year.

Key quotes

“We’ve recently firmed up … in particular, our Chinese renminbi forecast from 6.7 to 6.5 on a 12-month view.”

“It was one of the firm’s “strongest views” for Asian currencies.”

“The dollar is in a “structural period of weakening” after being quite strong over the last few years.”

“The driver behind this phenomenon was “the loss of US exceptionalism” as factors that previously propped the dollar up, such as relatively better economic growth stateside, have gone into reverse.”

“Historical evidence is very, very clear that a strengthening currency is generally supportive for the equity market.”

“A strong Chinese yuan would tend to “tilt” one’s investment focus more toward the domestic part of the economy where the “real kind of juicy stories.”

“The (yuan) would be just an extra tailwind for those ongoing structural themes.”

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