SHANGHAI, Nov 12 - Following Donald Trump's victory in the U.S. presidential election, global investment banks are revising their forecasts for the Chinese yuan due to anticipated trade tensions. Trump's campaign promises included imposing tariffs of 60% or more on Chinese goods, raising concerns about inflation and high U.S. interest rates that could strengthen the dollar and weaken the yuan.
Current projections from major investment banks suggest the yuan may weaken approximately 1.5% to 7.3 per dollar by the end of 2025. This follows a historical depreciation of 5% during the initial round of U.S. tariffs in 2018 and an additional 1.5% a year later during Trump's first term.
Investment forecasts had previously estimated the yuan would trade around 7.1 per dollar by the end of 2023. However, the outlook has shifted significantly in light of Trump's proposed tariff policies.
ING analysts predict a weaker yuan under the new administration, noting potential interventions by the People's Bank of China to stabilize the currency. UBS anticipates staged tariff implementations beginning in the second half of 2025, although the specifics remain uncertain.
BNP Paribas highlights the market's focus on the potential impact of Trump's tariffs, estimating that a 60% tariff could push the USD/RMB rate to between 7.5 and 7.7. Meanwhile, Société Générale suggests that while the yuan will face pressure, China's economic measures may cushion the effects of the tariffs.
Citi projects that a 10-15% tariff could lead to a 1.5-2.0% decline in the offshore yuan from current levels of 7.15-7.20.