Goldman: The price of the yuan will reach 7 against the dollar within a year

Global Investment Bank, “Goldman Sachs”, increased its expectations for the price of the payout of Yuan during the next twelve months to 7 against the dollar, which coincides with the start of the United States and China trade negotiations. Analysts at Goldman Sachs, led by Kalcashia Trevidi, wrote in a research note on Friday that the bank also increased its estimates for the Yuan price to 7.20 and 7.10 against the dollar during the next three and six months, based on several factors, especially the Chinese export power. Analysts said that “the current low levels of the currency, whether on a real basis weighed in the trade or compared to especially dollars, all indicate the possibility of the yuan in local transactions to serve as possible compensation for reducing customs duties.” Trade talks are making progress that the bank offers this positive view to the Chinese currency, while the United States and China, the two largest economies in the world, announced progress on trade negotiations that occurred early this week, despite the scarcity of announced details. The exchange rate of the Yuan and Chinese shares increased after this news on Monday, but the profits were limited. Goldman analysts previously expected the price of the yuan in local transactions within three months and within six and twelve months at 7.30 against the dollar. It is noteworthy that the last time the Chinese currency reached the level of 7 Yuans against the dollar was in May 2023. The Yuan has achieved profits despite the challenges that the Yuan has increased by 0.5% in local transactions since the beginning of the dollar, and has been supported by the hope of calming trading rod with the United States since January. However, its value is still low compared to the currencies of the commercial partners of China. The BNB Pariba asset management company also expects the yuan to test the 7 -dollar level this year if the US dollar is still poor and the Chinese economy reaches growth that exceeds expectations. “If the US dollar continues to decline, the possibilities of the rise of the yuan will be greater,” said Rick Cheung, who is responsible for managing an investment portfolio that includes investment in fixed income instruments in emerging markets during an interview. He added: “If the Chinese economy is growing the market and, for example, more than 5%, or even 5.5%, will be a strong support for the currency.” The impact of US customs duties at the moment, US customs duties are still affecting the Chinese economy, as the data showed that consumer prices were still shrinking for the third month in a row before the authorities announced a package with measures to support the slow economy last week. Goldman does not expect the Chinese currency to reach these new levels quickly. Analysts have indicated that China prefers to maintain the stability of the Yuan price “without sharp or major changes” despite the US fees of 145%. Analysts have written that Beijing prefers to use alternative political instruments such as financial facilitation and the issuance of government bonds to support the economy, rather than reducing the value of the yuan, a step that can lead to an acceleration of capital outdoor. Departing movements from the Chinese currency and Goldman analysts wrote: “The Chinese policy is likely to continue to prefer thoughtful and controlled movements of the currency.” And “But the path to the level of 7 (or what is below) can open the way for a faster increase in the currencies of the rest of the Asian countries against the dollar.” The Yuan increased to 0.2% against the dollar on Monday to 7,2278 in local transactions, and the Taiwanese dollar also recorded profits in an optimistic atmosphere of trade, while markets closed their doors in Indonesia, Malaysia, Singapore and the Philippines due to holidays.