A note via ANZ yesterday on the yuan, upgrading their forecasts for the currency:
6.70 for year-end 2020
6.60 for end-2021
Citing the currency strength is due to more than just dollar weakness
- fundamentals and flow picture remain very supportive
- The Chinese authorities appear to be comfortable with recent strength. Indeed, we believe there is room for the yuan to appreciate further before the move is deemed excessive - which we believe to be the CFETS RMB Index rising above 96.
- US-China tensions and the US presidential election are key risks. While they may induce some near-term volatility, we do not see them causing a change in the trend.
