Forecasts for Chinese yuan raised for Q2, Q3 2021

HSBC cite the currency strengthening more than expected recently, forecasts:

  • Q2 6.25 (from prior forecast at 6.5)
  • Q3 6.45 (also from 6.5)
  • End 2021 fall back to 6.6 (unchanged from previous)
Net FX inflows to China have moderated slightly YTD, HSBC expects this narrowing trend to continue and to quicken in 2H and 2022
  • “China is unlikely to deliberately strengthen the RMB so as to curb rising import costs” 
  • “The recent surge in commodity prices is partly supply-side driven, rather than due to China’s demand”
On the Fed:
  • “The Fed may be patient about rate hikes, but it will have to taper its asset purchases eventually” 
Info via Bloomberg
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