Yuan's Stability: Goldman Sachs and the People's Bank of China Respond to Depreciation Risks
The People's Bank of China's Stance on Yuan Stability
China's central bank has signalled its resolve to stabilise the yuan's exchange rate with increased seriousness during its latest policy meetings. As the yuan faces pressures, especially from the strong US dollar, the People's Bank of China (PBOC) emphasizes its role in preventing excessive depreciation.
Shift in Focus from 'Flexibility' to 'Resilience'
Recent statements by the PBOC indicate a significant change in outlook. Shan Hui, chief economist at Goldman Sachs, notes that the focus on exchange-rate flexibility has transformed into a commitment to exchange-rate stability. This reflects a proactive approach in light of US Federal Reserve policies and trade uncertainties under the upcoming Trump administration.
Market Impact and Forecasts
- The yuan breached the critical 7.3 per dollar mark for the first time since late 2023.
- Nomura projects the offshore yuan could hit 7.6 per dollar by May 2025.
- Morgan Stanley anticipates that the onshore yuan may weaken further, stabilising at 7.6 per dollar by the end of 2025.
- Barclays suggests the currency could reach 7.5 per dollar by a similar time frame.
The PBOC's new strategy reflects a determined response to ongoing economic pressures, employing counter-cyclical measures to sustain overall yuan stability.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.