Rabobank Forecast Usdcny

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Rabobank Forecast Usdcny

Rabobank Issues A New Forecast For Usd/Cny

The Chinese Yuan is under the spotlight this year for a number of reasons. The key reason is the trade friction between the US and China, along with domestic deflation.

Also, the monetary policy divergence remains a key driving force for the USD/CNY pair. Looking ahead, Rabobank's economists believe that tariff pressures will keep the Chinese Yuan weak in the short to medium term.

China Maintains A Cautious Policy

Any more US tariffs are sure to further weaken the Chinese economy and the currency. Meanwhile, the Chinese officials continue to maintain a cautious policy, which also weighs on the CNY.

If we look back at Trump's first term, he was always critical of how China was using unfair trading practices. He also talked extensively about how China is keeping its currency weak on purpose to gain a trade advantage.

Now that he is back in power again, the US government is doing everything in its power to fix the trade issue. But despite the heavy tariffs, the chances of achieving a trade balance with China are still not possible.

Today, China is a global export powerhouse, and the US just can't compete with it. So, even if the tariffs are high, China will still have the upper hand when it comes to exports.

Looking ahead, Rabobank believes that the US government might bring the USD/CNY exchange rate into focus once again. If that happens, we are sure to see big movements in the USD/CNY.

So based on all of this, Rabobank believes that USD/CNY is highly likely to drop towards 7 in the coming months. But that will only happen if the US forces China to strengthen its currency.

Meanwhile, China is also facing risks of deflation, property weakness, and a decline in domestic consumption. These factors could force the PBOC to shift towards a stimulative policy, which will weaken the Yen.

So as things stand right now, the USD/CNY is at a crossroads. In simple words, there is an equal chance for USD/CNY to make a new high or a new low!

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