China’s yuan volatility rising on interest rates, US presidential election: Goldman
Moves by the US Federal Reserve, as well as November’s US presidential election, would discourage selling the yuan, Goldman Sachs said on Friday
The volatility of the Chinese yuan’s exchange rate with the US dollar is set to rise in the near term due to the uncertainty surrounding interest rate cuts and the presidential election, investment bank Goldman Sachs said on Friday.
Moves by the US Federal Reserve, as well as November’s election, would discourage the selling of yuan, and could lead to a temporary “overshooting” in the currency’s strength, they added.
“We think the recent yuan appreciation against the US dollar is mostly driven by external factors, especially by the changes of market pricing for Fed rate cuts (faster Fed rate cuts) and US election,” Goldman Sachs research analysts led by Xinquan Chen said in a research note.
“External factors likely remain key drivers of [the] US dollar-yuan [exchange rate] in the coming months.”
The offshore yuan has gained about 2 per cent this month in the anticipation of an interest-rate cut by the US Federal Reserve, with the currency strengthening to surpass 7.1 against the US dollar to 7.076 on Friday.
