Factbox-Global investment banks see yuan recovery in second half of 2024

SHANGHAI (Reuters) – Global investment banks see the yuan facing continued downside pressure in the first half of 2024 before turning around over the following six months on views that the U.S. Federal Reserve will begin to cut interest rates by then, forecasts show.

With China’s economic recovery sputtering and the U.S. dollar surging until recently, the yuan has had a volatile year, having weakened 6.14% to the dollar at one point before giving back much of the losses.

The onshore yuan last traded at 7.1505 per dollar on Thursday and was down 3.5% so far this year.

Here is a summary of some forecasts for the Chinese currency:

INVESTMENT HOUSE Q1-2024 Q2-2024 Q3-2024 Q4-2024

Societe Generale 7.5 7.5 7.4 7.3

Citi 7.10 7.25

(0-3 (6-12

months) months)

MUFG 7.05 6.95 6.85 6.8

OCBC Bank 7.1 7.05 7 6.99

Oxford Economics 7

Goldman Sachs 7.3 (3 7.3 (6 7.15 (12

months) months) months)

HSBC 7.3 7.3 7.3 7.3

Mizuho Bank 7.05 7 7 6.95

Standard Chartered 7.15 7.2 7.15 7


ANZ 7.15 7.1 7.05 7

Morgan Stanley 7.5 7.45

Commerzbank 7.2 7.1 7 6.95



“While we view the strong policy-driven daily fixes of CNY as a clear indication of policymakers’ desire to reduce depreciation expectations and manage capital outflow pressures, we think a more sustained CNY appreciation would require a more convincing pickup in Chinese growth and improved prospects of asset market outperformance, which seems hard to envisage amid mixed activity data, continued property price declines, and negative inflation.

“Such a tepid macro environment in China in contrast to the strong activity picture we envisage in the U.S., combined with the continued interest rate differential between the two countries, will eventually limit the scope of CNY strength, in our view.”


“We see CNY staying supported into Lunar Year, but will likely give up some gains subsequently. Near term, seasonality is positive into the Lunar New Year holidays.”

“But the yuan may face renewed challenges in H1-24. We see USD/CNY testing higher in the range of 7.15-35 in H1-24 … Rate differential will remain wide with developed market (DM) rates staying higher and CNY rates lower for longer.

“Given difference in economic fundamentals, China inflation will likely stay structurally lower while DM inflation may stay sticky, resulting in persistent policy rate difference – even if the Fed starts cutting next year, USD rates will stay materially higher than CNY rates by end-2024.”


“The policy effort of containing CNY depreciation became a permanent factor in People’s Bank of China’s (PBOC) policy toolkit. However, extended monetary policy divergence would keep pushing the USD/CNY higher until there is a clear sign of a U.S. Fed pivot. Policy balancing between local rates and FX is likely to be slightly tilted toward lower local rates at the expense of a slightly higher USD/CNY.”

** ANZ

“We expect a turnaround in 2024 to result in a stronger CNY. The cumulative effects of the stimulus measures that have been announced, including the recent ones around the property sector, should start to reflect in better economic data in early 2024.

“With the Fed expected to start cutting interest rates by mid-2024, the USD should continue to correct from overvalued levels. This will see a return of portfolio flows into the onshore bond and equity market. The repatriation of past retained earnings by multinationals should also ease off and exporters are likely to increase their conversion rate.”


“China’s economy has yet to gain a firm footing and this will continue to pose downside pressure on the yuan in the near term. Also, even though the negative interest rate differentials between China and the U.S. have narrowed somewhat recently, they are likely to persist given the divergent policy directions for the Fed and PBOC.

“The yuan will unlikely strengthen substantially as structural headwinds, including the real estate troubles, will continue to pose risks to China’s growth outlook.”

(Reporting by Shanghai Newsroom; Editing by Emelia Sithole-Matarise)