Date
30 March 2017
China is expected to keep the renminbi exchange rate stable as it pushes its inclusion in the SDR basket. Photo: Bloomberg
China is expected to keep the renminbi exchange rate stable as it pushes its inclusion in the SDR basket. Photo: Bloomberg

Lenders see slightly weaker renminbi this year

Bankers are expecting the renminbi exchange rate to weaken slightly this year, according to a survey.

Estimates put it at 6.2445 to US$1, down 0.62 percent from last year, a Hong Kong Economic Journal poll of 11 banks shows.

The lenders expect the People’s Bank of China to widen the renminbi’s daily trading band.

Kelvin Lau, a senior economist for Asia of Standard Charter Bank (Hong Kong) Ltd., said the currency could be allowed to deviate 3 percent from the central bank’s daily reference rate. 

At present, it is allowed to trade within a 2 percent band.  

Some banks, however, are less optimistic in light of the government’s recent intervention in the stock market.

Bank of America Merrill Lynch earlier projected a 5-10 percent depreciation in the renminbi over the year.

Paulus Mok, Citigroup head of Greater China markets and Hong Kong treasury, said Beijing is likely to maintain a stable renminbi as it pushes its inclusion in the International Monetary Fund’s SDR (special drawing rights) basket.

The renminbi may strengthen to 5.80 to 6.50 against the US dollar in the next three to five years after becoming an SDR component. 

Andrew Fung, executive director of Hang Seng Bank Ltd. (00011.HK), sees the currency hitting 6.00 in three to five years, up 3-4 percent from the current level.

[Chinese version中文版]

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