USD/CNY to remain low in January, fluctuating within a narrow range – Mizuho

FXStreet reports that according to economists at Mizuho Bank, in January, the USD/CNY is forecast to fluctuate within a narrow range.

“In the times ahead, it is likely that other countries will catch up with China in terms of economic recovery via further economic stimulus measures and advancement in the development of vaccines. Therefore, market participants should remain cautious about the possibility for upward pressure on the Chinese yuan to weaken in the coming month.”

“In 2020, China has taken measures of monetary easing by carrying out large-scale fund provision operations while also partially cutting the LPR (the base lending rate), in order to deal with the current spread of covid. As a result, since the onset of the COVID-19 crisis, China has been achieving steady economic recovery more quickly than any other country.” 

“Since March, the US has held a zero-interest rate policy, and it is expected that this policy will be maintained until 2023. Thus, based on the difference in the monetary policy between the US and China, the Chinese yuan is forecast to appreciate against the US dollar from a medium to long-term point of view.”