Goldman Sachs believes that over the next 12 months, the Chinese yuan will strengthen significantly against the US currency. China's economy has almost recovered. Moreover, after the upcoming US presidential election Trump may leave his post. This will allow the Chinese currency to reach 6.70 per US dollar.
In December 2019, a new virus was discovered in China. The country's authorities quickly took measures to prevent the coronavirus spread. Thanks to this, it was possible to save the economy from harmful effects of quarantine. At the moment, China is showing a good recovery from the shock of the coronavirus pandemic.
According to the latest data, the level of exports and imports in China rose in June, although analysts expected them to drop. The level of production activity is also growing in the country.
Nevertheless, there are risks of the Chinese currency collapse. Firstly, the protracted coronavirus pandemic, which led to the global economic recession.
Secondly, strained relations between China and the United States. The American president is dissatisfied with China's policies, which could lead to certain sanctions. Moreover, presidential election will be held in November, which is fraught with claims against China.
However, if former US Vice President Joe Biden takes up the position of the President of the United States, the tariffs imposed during the US-China trade war may be lifted. Joe Biden's tactics are significantly different from those of Donald Trump. Biden has less interest in tariffs, Goldman Sachs strategist Zach Pandl said. This, in turn, is very good for the yuan.
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