Researchers at UOB Group in the Quarterly Global Outlook remain bearish on the Chinese currency and see USD/CNY heading toward 7.25/30 in the next year.
Key Quotes
“Our weaker outlook of China’s economy also supports our view of a weaker CNY going forth. We have recently downgraded China’s growth to 5.9% in 2020 from 6.2% previously after the US-China trade conflict has escalated into the Worst Case Scenario of our earlier assessment whereby all bilateral merchandise trade flows are tariffed”.
“Overall, underpinned by the various headwinds against the CNY, we believe USD/CNY will trade in new normal above 7.00 going forth. Our new point forecasts for USD/CNY are 7.20 at 4Q19, 7.25 at 1Q20 and 7.30 for both 2Q and 3Q20. With the unlikelihood of a trade deal in the near term, USD/CNY is likely to stay “sticky” above 7.00. As such we continue to urge investors to hedge their USD risks”.
Share
