Bank of America (BofA) has released its forecasts for the USD/CNY exchange rate, predicting a steady increase in the coming quarters. The bank projects that the exchange rate will rise to 7.35 by the second quarter of 2024 and reach a peak of 7.45 by the third quarter of the same year. This outlook is primarily based on persistent rate differentials and unbalanced policy measures between the United States and China.
In addition to its outlook on the Chinese yuan, BofA has also adjusted its stance on other Asian currencies. The bank has turned bearish on the Korean won (KRW) and adopted a neutral position on the Indian rupee (INR), attributing these changes to the strength of the US dollar. BofA’s bearish perspective also extends to the Taiwanese dollar (TWD), Thai baht (THB), and Vietnamese dong (VND), citing portfolio outflows as a contributing factor.
BofA maintains a neutral outlook on a range of other Asian currencies, including the Hong Kong dollar (HKD), Indonesian rupiah (IDR), Malaysian ringgit (MYR), and Philippine peso (PHP), as well as the Singapore dollar (SGD). Notably, the bank has not expressed a bullish sentiment on any Asian currency at this time.
The bank’s analysis indicates a cautious approach towards Asian currencies in the face of a strengthening US dollar, which impacts exchange rates and could influence regional economic dynamics. The forecasted rise in the USD/CNY exchange rate suggests that investors and businesses with exposure to these currencies should be aware of potential fluctuations in the coming months.
