Key insights
- Global banks are raising their yuan forecasts due to China's export strength and stable US-China trade relations. A stronger yuan could modestly reduce the competitiveness of US exporters, but also potentially lower import costs, leading to a slightly positive influence on US equities. The impact is limited due to the complex interplay of factors influencing US market performance.
SHANGHAI, May 18 (Reuters) - Some global investment houses revised up their yuan forecasts, fuelled by China’s export competitiveness and steady trade relations with the U.S., the world’s biggest economy.
The Chinese currency has been grinding higher this year, rising nearly 3% against the dollar so far to 6.8040 per dollar on Monday, and is up about 2.6% versus its major trading partners.
Here are some details:
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HSBC bets on a fundamental case for modest further yuan appreciation and has raised its forecasts to 6.65 per dollar by year-end from 6.75 previously.
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On top of highly competitive exports, "RMB internationalisation, long-term diversification from USD and economic rebalancing are key domestic structural themes supporting the RMB. Externally, U.S.-China economic relations have become stable and more constructive since May 2025," HSBC analysts said in a note.
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Deutsche Bank expects this year’s strong Chinese import growth to pave the way for further yuan gains.
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"A surge in China’s imports of upstream products will likely be followed by a further pickup in export orders, or a recovery of domestic demand, or both," Deutsche Bank economists Yi Xiong and Deyun Ou said in a note.
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Deustche Bank’s baseline forecast is for the currency to strengthen to 6.55 per dollar at end-2026 from 6.7 previously.
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Goldman Sachs also sees scope for further and "longer-lasting" yuan strength, underpinned by China’s unprecedented external surplus and strong export competitiveness.
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Despite headwinds from the Iran war and higher energy costs, Goldman said the medium-term outlook remains positive, supported by expected global investment in energy security and renewables, which would benefit China’s exports.
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The U.S. bank expects the yuan to hit 6.80, 6.70 and 6.50 per dollar in three, six and 12 months, compared to 6.85, 6.80 and 6.70 previously.