“Dollar Smile” theory creator Stephen Jen said the yuan will keep rising in the next year, as the upside trend will meet the interests of China's policy makers and other countries in the world.
The chief executive officer of Eurizon SLJ Capital estimated that the yuan will increase 12 percent to 6.25 (HK$6.9) per US dollar by the end of 2026.
This move came as the yuan rose to its highest level in more than 14 months against the dollar on Tuesday after an equally strong midpoint setting by the central bank and on year-end exporter demand, with the onshore yuan hitting 7.0417 per US dollar in early trade.
He described the appreciation as moderate, which would not harm China's balance of payment while bolstering its asset value.
The world will not tolerate the softer yuan policy, and Beijing also recognized that the weakened yuan is detrimental, which intensified the vicious cycle of oversupply, slowdown demand, and huge trade surplus, the company said.
As China has set the goal to double the total income from 2020 and 2035, which is denominated in US dollars, the depreciating yuan would prevent its realization, it added.
Staff reporter and Reuters
