Goldman Sachs sees Chinese yuan strengthening over the next 12 months


A Chinese clerk counts renminbi yuan banknotes at a bank in China on December 2015.

Jie Zhao | Corbis Information | Getty Photographs

SINGAPORE — Goldman Sachs expects the onshore Chinese yuan to improve to 6.5 for each dollar about the upcoming 12 months, according to Timothy Moe, co-head of Asia macro study and chief Asia-Pacific fairness strategist at Goldman Sachs.

“We have recently firmed up … in unique, our Chinese renminbi forecast from 6.7 to 6.5 on a 12 thirty day period perspective,” Moe advised CNBC’s “Squawk Box Asia” on Thursday, adding that it was 1 of the firm’s “strongest views” for Asian currencies.

In comparison, the onshore Chinese yuan changed palms at 6.7767 per greenback in the afternoon of Asian investing several hours on Thursday. Its offshore counterpart traded at 6.7764 per dollar.

That will come as the greenback is in a “structural period of time of weakening” soon after currently being quite strong above the past handful of years, Moe claimed. He included that the driver driving this phenomenon was “the decline of U.S. exceptionalism” as variables that earlier propped the greenback up, such as comparatively improved financial progress stateside, have “long gone into reverse.”

Both the onshore and offshore Chinese yuan noticed a remarkable strengthening this 7 days from degrees previously mentioned 6.8 versus the dollar. That came as facts from China’s National Bureau of Figures confirmed the country’s very first constructive retail income report for 2020 in August.

‘Tailwind’ for Chinese stocks

Moe mentioned the energy of the Chinese forex would provide a “tailwind” for stocks in the country.

“Historic proof is quite, pretty apparent that a strengthening currency is commonly supportive for the fairness market place,” he reported.

In particular, the extra domestic-oriented areas of the current market are probably to profit as the exterior-experiencing sectors “develop into incrementally much less competitive” in opposition to the backdrop of a much better currency, the strategist said.

As a end result, Moe explained a strong Chinese yuan would have a tendency to “tilt” one’s investment emphasis extra toward the domestic part of the economy where the “true form of juicy tales” — these types of as the increase of the electronic financial state, new infrastructure as effectively as the digitization of the use of products and services —  reside.

“The (yuan) would be just an further tailwind for people ongoing structural themes,” Moe explained.