Analysts at HSBC raised their forecasts on the Chinese yuan, as they see the currency strengthening more than expected recently.
Key quotes
“Q2 6.25 vs. prior forecast at 6.5, Q3 6.45 vs. 6.5 previous. “
“By end-2021, USD/CNY will revert to 6.6.“
“Net FX inflows to China have moderated slightly YTD.”
“Expect this narrowing trend to continue and to quicken in 2H and 2022.”
“China is unlikely to deliberately strengthen the RMB so as to curb rising import costs.”
“The recent surge in commodity prices is partly supply-side driven, rather than due to China’s demand.”
“The Fed may be patient about rate hikes, but it will have to taper its asset purchases eventually.”
This article was originally published by Fxstreet.com. Read the original article here.