The Chinese yuan could be looking forward to a recovery in the second half of the year as the dollar begins to weaken, according to forecasters interviewed by Bloomberg.
“We suspect that the dollar is at or very close to its peak,” said economist at Investec Ryan Djajasaputra. According to their data, the yuan can expected to rise more than 4% to 6.35 against the dollar by the end of the year.
Bill Adams, senior economist at PNC, predicts greater appreciation – as high as 6.58 to the greenback – as a stronger euro and pound give a weaker outlook for the dollar. Both PNC and Investec believe the fallout from US-China trade tensions on the yuan will be limited.
The yuan has dropped 3% since mid-June, after weak economic data for May triggered pessimism over China’s growth prospects for the second half of the year and hawkish rhetoric from Washington over trade issues intensified.