LONDON (Reuters) - China’s yuan will have failed to reverse June’s losses against the U.S. dollar even in a year from now, according to a Reuters poll of foreign exchange strategists that was conducted before the U.S. was due to impose steep tariffs on Chinese exports.
The currency has been volatile in the run-up to the U.S. levying tariffs on Chinese goods. It had its worst month on record in June, losing about 3.3 percent of its value against the greenback, and the slide continued into July.
At the start of the week, the yuan, which is closely managed by the Chinese authorities, fell as far as 6.72 per dollar, weaker than the most pessimistic one-month forecast of 6.60 in the last monthly Reuters poll.
“Risks for a softer yuan have increased recently given the rising threat of larger tariffs being imposed by the U.S. on China,” said Edoardo Campanella at UniCredit.
However, the yuan rebounded on Tuesday after People’s Bank of China Governor Yi Gang said the central bank would seek to keep the yuan at a stable and reasonable level. It continued to ride the updraft on Wednesday but struggled on Thursday.
The yuan was trading around 6.64 per dollar on Thursday and will be around the same level in a month. At year-end, the yuan will have strengthened to 6.57 and then go stronger to 6.50 in a year, the poll of over 60 strategists taken this week showed.
Those median forecasts were weaker than in a June poll and the most pessimistic 12-month forecast moved from 6.80 to 7.20 per dollar.
China has previously intervened in currency markets to weaken the yuan, triggering accusations that Beijing was trying to gain an unfair competitive advantage for its exporters - charges revived by U.S. President Donald Trump in recent years.
The U.S. president has said tariffs would make the U.S. stronger and levies on $34 billion worth of Chinese exports will kick in later on Friday. Beijing has said it would retaliate with tariffs on U.S. products.
But Trump has threatened to escalate the trade conflict with tariffs on as much as $400 billion in Chinese goods if Beijing does retaliate.
“A very tricky period lies ahead for China. Growth is under pressure; exports are under pressure; stocks are under pressure; and the currency is under pressure,” said Michael Every at Rabobank. “Warning shots all round, in fact.”
(For other stories from the Reuters global FX poll:)
Polling by Khushboo Mittal and Anisha Sheth; Editing by Sam Holmes