UBS forecasted an upside risk to the exchange rate in the near term. The bank’s analysts predict that the People’s Bank of China (PBoC) may soon adjust the daily USD/CNY fixings upwards in response to the strength of the US dollar since the beginning of 2024.
The has seen a 4.6% increase this year, yet the PBoC has maintained the USD/CNY rate around the 7.10 mark to preserve currency stability.
The yuan’s relative strength against other major currencies has been a side effect of the PBoC’s stable fixings, which UBS believes is counterproductive to China’s economic growth and anti-disinflation efforts.
The bank…
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