Goldman Predicts Yuan Will End Year at 7.0 vs USD

China’s currency has already dropped quite a bit in the new year, but the yuan is still headed “meaningfully” lower this year, Goldman Sachs said.

The dollar will be fetching 7.0 yuan by year-end, up from 6.5807 currently, Goldman Sachs forecast in a note Monday.
That “reflects the combination of a view that Chinese policymakers are likely to be comfortable with modest (our forecast implies about 2.5 percent) depreciation against the CFETS (China Foreign Exchange Trade System) basket, and that the U.S. dollar is likely to appreciate further against other currencies in 2016,” Goldman said.

The renminbi, as the yuan is also known, has already sparked consternation so far in 2016.

Last week, policy makers at the central bank, the People’s Bank of China (PBOC), tinkered again with the currency without providing much indication to the market about its endgame — one factor in the China market selloff that spurred a global stock rout.

via CNBC

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza