Standard Chartered cuts yuan forecast for year end, sees slight decline in 2017
Bank sees PBOC defending 6.80 level after it withdrew support for 6.70 against the dollar
Standard Chartered has cut its forecast for the yuan’s exchange rate against the US dollar to 6.75 by the end of the year from 6.67.
And it expects the Chinese currency to weaken slightly further, to 6.78 by the end of 2017, below its previous forecast of 6.66.
The bank’s revision, contained in a research note, comes after the yuan slumped 1.1 per cent in the previous eight days to a new six-year low as the greenback strengthened and Chinese exports tumbled.
The yuan’s recent performance has hit the market particularly hard as there has been widespread speculation that the Chinese central bank would refrain from supporting the currency and allow depreciation to continue after its inclusion in the International Monetary Fund’s (IMF) Special Drawing Right (SDR) currency basket on October 1.
The 6.70-6.80 level may hold for the yuan against the greenback
The authorities have signalled that they no longer wish to defend the 6.70 level amid a broader advance of the US dollar, said Eddie Cheung, Asia FX strategist at Standard Chartered in Hong Kong, in his latest research note.