Monitor: forecasts for Yuan and Hong Kong dollar
amid the increase in the Federal Reserve Betions of the US dollar, holds positions on most world currencies, and in the foreseeable perspective its dynamics will remain a key factor for Yuan and Hong Kong dollar courses. BCS analysts the world of investment await the fluctuations in the USD/CNY course in the range of 7.1-7.35 in November and consolidation near 7.20 by the end of the year.
Our USD/CNY Forecast for November: 7,10-7.35 Forecast of the USD/RUB course: 61-62 Forecast CNY/RUB: 8.30-8.73 HKD/USD-We expect a course saving at the level of 7, 85 US dollar may unfold in the following The year
dollar slowed down on the backdrop of the expectations of a softer Fed’s policy and elections. The US dollar index declined in the second half of October amid market expectations of a less aggressive increase in the Fed’s bets after the November meeting. Intermediate elections in the United States will be held on November 8.
current polls show that the Republicans have an advantage in the elections to the House of Representatives, while the struggle for the Senate is still equal. The outcome may be favorable for the dollar: USD/HKD will remain At the level of the upper boundary 7.85. At the same time, the USD/CNY course in October grew shortly above 7.30.
Yuan also weakened in October – we will single out three reasons. We see three reasons for the weakening of the yuan:
General weakness of Asian currencies. They generally lagged behind the G10 currencies in October, since Asian countries did not increase interest rates. Outfit of cross -border investments. As part of the Stock Connect program, a clean outflow of investors from shares in the amount of 44 billion yuan was recorded in October. Foreign investors were reduced Investments in Chinese bonds by about 61.6 billion yuan in September amid an increase in the difference in interest rates between the United States and China. Changes in market moods. The difference between the courses of the offshore yuan and Yuan grew in the middle-end of October. Yuan’s recession increased, and more and more investors in the derivatives market were concerned about the risks of growing a pair of USD/CNY.
Chinese regulators are working on stabilizing the exchange rate. In October, the People’s Bank of China implemented measures aimed at supporting Yuan: The relief of standards to attract foreign capital and conduct calculations in foreign currency by Chinese banks.
in November we continue to monitor the introduction and implementation of such support measures, which should stabilize the upper boundary of the USD/CNY oscillation range. We believe that with the introduction of a macroeconomic policy aimed at growth, the flows of cross -border portfolio investments will gradually recover. Export was restrained by a weakening of external demand, and real estate investments remained under pressure.
We believe that China will continue to pursue a favorable macroeconomic policy and adhere to a soft monetary policy, and the country’s GDP growth in annual calculus will probably remain in the IV quarter of 2022. As a result, the economic situation in the PRC should improve.
course forecast-fluctuations in the USD/CNY 7,10-7.35 range in November, 7.20 by the end of the year. We believe that in November, the U.S. dollar index and investment fund flows will still affect the yuan exchange rate. Taking The policy of stabilizing the exchange rate of the NBK, we believe that the upper boundary of the USD/CNY oscillation range is unlikely to grow significantly for a month. We expect USD/CNY oscillations in the range of 7,10-7.35 in November. We still predict the gradual stabilization and restoration of the yuan. However, by the end of the year, the USD/CNY steam may remain about 7.20.
we assume that next year the Fed will complete the tightening cycle, since the US economy will enter the descending trend, and the dollar may turn down. At that time The course of the Chinese yuan may begin to grow, since the restoration of the economy of the PRC becomes more stable.