USD/CNY seen around 7.19 in six months amid US-China trade spat – Reuters poll

According to a Reuters poll of strategists, the Chinese authorities are likely to continue weakening the Yuan amid ongoing US-China trade war and a slowdown in the domestic economy.

Key Findings:

“The latest Aug. 29-Sept. 4 Reuters poll of nearly 60 strategists showed the yuan is expected to trade around 7.19 to the dollar in six months, over 0.5% weaker than Wednesday's 7.15, before readjusting to 7.16 in a year.

That marks the third month in a row where analysts have lowered their yuan outlook.

Nearly two-thirds of analysts who answered an additional question said China would fight the U.S. trade war by depreciating the yuan further.

The most pessimistic 12-month view, 7.75 per dollar in the latest and previous surveys taken after the yuan breached the 7 per dollar rate, is the weakest since polling began more than a decade ago for the currency.

That suggests a clear bias towards a further downgrade.

About 70% of respondents who answered a separate question said China's decision to change its interest rate system was not a step towards allowing the yuan to trade more freely.”