LONDON (Reuters) - Goldman Sachs has upped its 12-month yuan/dollar exchange rate forecast to 6.20 yuan from 6.45 previously, predicting that trade relations with the United States would limit China’s ability to weaken its currency.
In a note received on Wednesday, the bank said it had also raised its 3-month yuan forecast to 6.30 yuan from 6.35 CNY= earlier, while changing the 6-month forecast to 6.25 from a previous 6.40.
Goldman Sachs analysts said in a research note that “the renewed focus on trade relations with the US...(and) the desire to facilitate local currency bond inclusion in international benchmarks” would offset slower Chinese growth and authorities’ uncomfortableness with further yuan appreciation.
The yuan is currently trading at 6.28 versus the dollar, having rallied from around 6.5 yuan at the start of 2018 amid rising trade tensions between Washington and Beijing.
Reporting by Tommy Wilkes; editing by Sujata Rao