Bank of America (BofA) forecast that the exchange rate is expected to rise, rising to 7.35 in the second quarter of 2024 and peaking at 7.45 in the third quarter of the same year. The bank’s prospects are based on persistent interest rate differentials and unbalanced policy measures.
In addition to its outlook on the Chinese yuan, BofA has adjusted its stance on other Asian currencies. The bank has turned bearish on the Korean won (KRW) and taken a neutral position on the Indian rupee (INR), attributing these changes to the strength of the US dollar.
BofA’s bearish outlook also extends to the Taiwan dollar (TWD), the Thai baht (THB) and the Vietnamese dong (VND), with portfolio outflows cited as a contributing factor.
BofA remains neutral on a range of other Asian currencies, including the Hong Kong dollar (HKD), Indonesian rupiah (IDR), Malaysian ringgit (MYR) and Philippine peso (PHP), and maintains a neutral view on the Singapore dollar (SGD). The financial institution has not expressed any bullish sentiment on any Asian currency at this time.
The bank’s analysis signals a cautious approach toward Asian currencies in the face of a strengthening U.S. dollar, which impacts exchange rates and could impact regional economic dynamics. The forecast rise in the USD/CNY exchange rate suggests that investors and companies with exposure to these currencies should be aware of potential fluctuations in the coming months.
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