SHANGHAI : Global investment banks have raised their forecasts for the Chinese yuan this year on expectations the country's economic reopening and Beijing's decision to relax property sector curbs will trigger strong capital inflows.
"China's reopening and visible policy shift toward the property sector has lifted the yuan's outlook, and there could be more upside in the medium term," said Lemon Zhang, FX strategist at Barclays. The International Monetary Fund has revised China's growth outlook sharply higher for 2023 to 5.2 per cent, from 4.4 per cent it forecast in October.
"While asset markets have already priced in a meaningful improvement, we expect reopening to continue to lift Chinese asset prices, with the most upside in equities and credit," analysts at Goldman Sachs said in a note.Persistent capital inflows into China's A shares - stocks of Chinese companies that trade on domestic exchanges - are also supporting the yuan, and Citic Securities expects foreigners to purchase 200 billion to 300 billion yuan worth of Chinese stocks this year.