China’s yuan to rise against US dollar in 2024

The Chinese yuan will strengthen for the first time in three years in 2024, a Bloomberg poll showed, as narrowing interest rate differentials lead to a decline in capital outflows.

The median forecast of 17 traders and analysts surveyed indicates that the currency will be valued at around 7 yuan to the US dollar by the end of next year.

“The main positive factor over the next 12 months would likely be a narrowing of the U.S.-China interest rate gap as the Fed eases monetary policy,” respondents said.

“Next year’s expected interest rate cut cycle from major central banks will help narrow the gap between interest rates in the United States and those in China while easing the pressure on capital outflows,” Ken Cheung, chief Asian currency strategist at Mizuho Bank in Hong Kong, said.

“However, foreign investors are likely to remain cautious towards Chinese investments due to the ongoing chaos in the real estate sector, a weak recovery, and tensions between China and the United States,” Cheung wrote in a note on the 2024 outlook.

The note indicates that the expected level of Mizuho Bank’s yuan at the end of the year is estimated at $6.95, which means an increase of about 2% from the current level.