If it ends 2023 at 6.5, the yuan will be up 6.15% for the year, the best gains since 2020. COVID-induced disruptions and the Federal Reserve's rate rises have pressured the yuan , driving it down roughly 8% against the dollar last year, its worst annual performance since 1994. The International Monetary Fund has revised China's growth outlook sharply higher for 2023 to 5.2%, from 4.4% it forecast in October. 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. They forecast the yuan at 6.5 per dollar by the end of this year, compared with 6.9 previously. Persistent capital inflows into China's A shares - stocks of Chinese companies that trade on domestic exchanges - are also supporting the yuan, and Citic Securities expects foreigners to purchase 200 billion to 300 billion yuan ($44.46 billion) worth of Chinese stocks this year. Improving confidence has also helped extend gains in China's new home prices in January, a private survey showed on Wednesday.
In a previous Reuters survey conducted in November, analysts
had predicted the Chinese currency will finish 2023 around 7 per
dollar.
Still, analysts also reckon Beijing will try to limit yuan
gains, given worries about a possible U.S. recession hurting
Chinese exports.
Here is a summary of some forecasts for the Chinese currency
(previous forecasts in brackets):
INVESTMENT Q1-2023 Q2-2023 Q3-2023 Q4-2023
HOUSE
Goldman Sachs 6.5 (6.9)
HSBC 6.7 (7.0) 6.6 6.55 6.5 (6.9)
(6.95) (6.92)
UBS 6.6 (6.9) 6.6 6.5 6.5 (6.7)
(6.8) (6.7)
Standard 6.7 (7.05) 6.8 6.8 6.75
Chartered (7.1) (7.0) (6.95)
Barclays 7 7 6.8 6.7
($1 = 6.7470 Chinese yuan)
(Reporting by Winni Zhou and Brenda Goh; Editing by Jacqueline
Wong)
