USD/CNY risks further weakness in 2021 – UOB

Strategists at UOB’s Quarterly Global Outlook noted the CNY is expected to gather extra pace in the next months.

Key Quotes

“Despite the increasingly tense relationship between the US and China, the stronger-than-expected growth momentum in China and stable monetary policy stance are the key drivers of CNY against the USD.”

“With expectations that the growth recovery in China continues well into 2021, we believe that there is room for further CNY strength from here on. Furthermore, the PBoC has not made any hints or comments in recent days that the near-term strength in the CNY at 6.79 is excessive.”

“As such, we update our USD/ CNY point forecasts to 6.70 for 4Q20, 6.65 for 1Q21, and 6.60 for both 2Q21 and 3Q21.”