China’s yuan is anticipated to weaken in the coming 6 Months, a Goldman Sachs analyst said. Timothy Moe, a co-leader in macroeconomic research in Asia, said the bank expects the Chinese currency to surpass the psychological barrier of $ 7 per dollar to 7.1 in the upcoming 6 Months. The currency pair is trading at around 6.94, as the yuan has dropped by 6% against the dollar since the beginning of the year.
The United States is looking at 7 and probably a little above, as evidence to support manipulation charges of currency, “Moe told Squawk Box of CNBC.
China would want to avoid being open to such accusations, especially before the meeting of President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit next month, Moe said.
Trump often blames China for keeping its currency weak, so that its exports get cheaper and resulting in more competitive.
China has been disparaged for deserting its currency, but strategists said the country has been working to support the currency since it approached that key level of 7. Leaders in Beijing have tried to restrict the capital outflow which speeds up after the weakening of the currency.
The Chinese central bank fixed a daily exchange rate on the basis of recent prices for yuan and makes it possible to trade with the dollar in a bond that can be up to 2% above or below that level.
Moe also stated that Chinese yuan is expected to depreciate and moderate with the recent strengthening of the dollar.
Since the commencement of the trade war amid China and the US, China has been facing multiple trade-related concerns, and as its consequence, the country’s economy has drastically affected. The country now faces a high time in terms of economic growth.