Economic analysts from the Goldman Sachs Group Incorporated provided their insights regarding the Chinese renminbi as this new year commenced. They remarked that this 2022, the official currency of the world’s second-largest economy could possibly witness gains versus the US dollar.
We feel curious about how the Chinese renminbi is performing at the start of this year. We understand that similar to the rest of the world, the coronavirus or COVID-19 pandemic is pummeling China again.
At this juncture, we want to help our readers, especially those holding units of the Chinese renminbi, stay updated regarding the latest developments relating to this foreign currency.
According to the Goldman Sachs Group Incorporated economic analysts, led by chief Asia economist Andrew Tilton, the Chinese renminbi could see small further gains to 6.2 yuan per US dollar by the culmination of this year.
In a note released this week, they wrote that this possibility is likely as China maintains a meaningful current account surplus. Moreover, the economic analysts mentioned other factors that can aid the Chinese renminbi.
One of these elements is the solid net portfolio inflows driven by index inclusions. Another factor the Goldman Sachs economic analysts pointed out is a possible acceleration in equity purchases by foreigners with domestic stocks likely performing better this 2022 than last year.
At the time of writing, the Chinese renminbi is worth 6.36 yuan per US$1. According to the news posted online by Canadian business news network BNN Bloomberg, the Goldman Sachs economic analysts also mentioned other current events impacting the Chinese yuan.
They pointed out that the Chinese Government had vowed to change its policy focus this year from preventing risks to stabilizing economic growth in China. The Goldman Sachs economic analysts affirmed that China’s administration had warned of a triple whammy of weakening expectations, a supply shock, and contracting demand.
Moreover, they mentioned the ongoing COVID-19 healthcare crisis in which the Chinese Government has imposed stringent measures to contain the outbreaks. This step includes the hard lockdown presently implemented in Shaanxi Province’s capital, Xi’an.
Consequently, the Chinese Government’s policy has led to a slump in consumption and disruptions to travel and production. Additionally, its measure has added pressure on the domestic economy, already weighed down by a housing market slump.
We think the Goldman Sachs economic analysts can help China manage its official currency. We understand that the Chinese renminbi is subject to foreign exchange volatilities due to various factors, like the ongoing COVID-19 crisis and the Omicron variant.
However, with the guidance of some professional insights that the Goldman Sachs economic analysts gave, we believe the Beijing Government and the central bank, the People’s Bank of China, can certainly help the Chinese renminbi’s status for the people’s benefit.