Bank of America (BofA) forecasts that the exchange rate is expected to rise, rising to 7.35 by the second quarter of 2024 and peaking at 7.45 by the third quarter of that year. The bank’s prospects are based on persistent differences in interest rates and unbalanced policies.
In addition to its forecast for the Chinese yuan, BofA adjusted its position on other Asian currencies. The bank took a bearish stance on the Korean won (KRW) and took a neutral stance on the Indian rupee (INR), attributing these changes to the strength of the US dollar.
BofA’s bearish outlook also extends to the Taiwan dollar (TWD), Thai baht (THB) and Vietnamese dong (VND), citing portfolio outflows as a contributing factor.
BofA remains neutral on a number of other Asian currencies, including the Hong Kong dollar (HKD), Indonesian rupiah (IDR), Malaysian ringgit (MYR) and Philippine peso (PHP), and maintains a neutral outlook on the Singapore dollar. (SRS). The financial institution has not expressed a bullish sentiment on any Asian currency at this time.
The bank’s analysis points to a cautious approach to Asian currencies in the face of a stronger U.S. dollar, which is weighing on exchange rates and could weigh on regional economic dynamics. The projected rise in the US dollar-renminbi exchange rate suggests that investors and businesses involved in these currencies should be aware of potential fluctuations in the coming months.
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