FACTBOX-Forecasts for the yuan rate and regime

BEIJING, June 11 (Reuters) - Following are recent forecasts by selected banks and brokerages on what will happen to the yuan, or renminbi (RMB):

Yuan offshore forwards: CNYNDFOR=

Spot yuan: CNY=CFXSCNY=



“We expect the strong export numbers in May to increase international pressure on the currency issue. On the other hand, the weakened euro and domestic wage pressures are likely to limit the size of any appreciation in the near term.

“The recent developments reinforce our view that reform will likely be more about increasing flexibility than appreciation. We continue to expect a widening of the USD/CNY trading band in 2010, although the exact timing is difficult to forecast and goes beyond economics.”


“We maintain our long-standing call for a renminbi depeg from, and revaluation against, the USD during the summer, especially in view of the strong trade data.”


“We keep our 3, 6 and 12-month USD/CNY forecasts at 6.74, 6.66 and 6.49, respectively. While we had never built in any meaningful up-front revaluation, the chance now is even more remote.

“However, moving softly to a more flexible exchange rate regime is the right thing for the Chinese government to do, not least because it could help reduce trade protectionist pressures.

“Our long standing baseline view is that the move could take place anytime in the rest of the year, with an eye to the window of opportunity left around the G-20 meeting on June 20.”

ING (June 10)

“Contagion from turmoil in European government debt markets undermined two principal supports of sell USD/AXJ sentiment, the consensus forecast of a large CNY revaluation and the consensus forecast that USD would depreciate.

“We have pushed out our forecast USD/CNY trading band widening to 2H11.”

UBS (June 4)

“The strength in economic recovery, including in exports, provides support for an early resumption of RMB appreciation. However, the sovereign debt crisis in Europe has increased uncertainty across the board, which may make the government more hesitant for the moment.

“Provided that financial markets stabilize in the next few weeks, we expect the RMB to be allowed to appreciate faster against the USD within the next couple of months, most likely in the form of a gradual move accompanied by an increase in the daily trading band, and trade at 6.6 against the USD by end of this year.”

RBS (May 28)

“Europe’s problems have spurred speculation that China might sell-off its euro assets while also permit Chinese yuan depreciation. While not entirely unjustified, such speculation overlooks China’s emphasis on stability and the country’s strategic rise.

“China has also invested significant political capital in its “stable currency policy”, arguing the policy prevented a worse outcome after the crises of 1998 and 2008 when other currencies were depreciating sharply. It is unlikely to undermine its position by now allowing the currency to weaken.”


“Our expectation remains that the renminbi will climb from today’s 6.83/$ to 6.75 by the end of the year and to 6.50 by the end of 2011. This would be a 5 percent gain against the dollar by the end of next year and, based on our forecasts for other currencies, a 15 percent gain in trade weighted terms.

“The upcoming G20 summit is likely to be dominated by discussion of how to contain Europe’s crisis. But pressure on China will not go away as long as the dollar peg remains. Indeed, if Europe’s recovery falters, the world will look even more towards China and other emerging economies as a source of demand. Calls for China to allow currency appreciation will soon get louder. The U.S. will probably not be the only one complaining. Many emerging markets have experienced similar currency gains to China and will view any decision to delay exchange rate reform as an attempt to eat into their global market share.”


“We are postponing our call for Chinese yuan ‘de-pegging’. Previously, we had forecast that China would ‘de-peg’ the Chinese yuan from the U.S. dollar in May. This was based on the following factors: (1) the fact that the global financial crisis was past its worst, (2) China’s strong domestically led growth, and (3) the window of opportunity created by the U.S. Treasury’s postponement of its April currency report.

“Moreover, comments from Chinese officials, particularly from the People’s Bank of China (PBoC), appeared to signal a readiness to enact ‘currency reform’ and de-peg the U.S. dollar-Chinese yuan exchange rate sooner rather than later. However, since then, the situation in Europe has clearly changed for the worse, and China’s domestic growth may also be peaking.” (Reporting by Alan Wheatley, Simon Rabinovitch, Zhou Xin and Aileen Wang in Beijing; Lee Chyen Yee in Hong Kong; Kevin Yao in Singapore)