Forecast of the exchange rate of the yuan for 2023
The Chinese yuan is one of the most popular trading and reserve currencies in the world. In 2023, it surpassed the euro for the first time in terms of the volume of transactions through SWIFT. The yuan is second only to the dollar. This increased interest in it from traders and added an additional level of support to the course. But there are several factors that put pressure on the Chinese currency.
The exchange rate of the yuan: dynamics over the year
The yuan started 2023 against the US dollar at $1.44 per Ұ10. It reached its peak by mid-January. Traded at $1.48 per Ұ 10. Then a strong decline began with rare price spikes.
Statistics of the yuan exchange rate for the year: by November it dropped to $1.36. That is, I lost more than 10 cents compared to the peak figures.
Why is the yuan falling throughout 2023? This is not the first year that the Chinese currency has been losing value. In 2020, it began to grow strongly. By 2021 it reached $1.58. The decline began in 2022.
The yuan exchange rate for 2023 temporarily regained ground due to economic indicators and the weakness of the dollar. Then the US currency strengthened. The Chinese economy recovered too slowly.
By November 2023, the yuan exchange rate over the past year had reached the same level at which it started. At the end of 2022 there was also a strong decline. Now the yuan is collapsing the most in the last 13 years.
The further forecast for the yuan/dollar exchange rate is disappointing for the national currency of China. Rating Forex warns: despite its high position on the world market, the currency continues to fall in price. But some analysts see signs of growth.
What does the yuan exchange rate depend on?
In 2023, China showed high GDP. The unemployment rate in the country has dropped significantly. August oil refining figures broke all records.
China’s GDP for the third quarter of 2023-it showed growth and exceeded all expectations. Such statistics support the national currency of the People’s Republic of China. At the same time, the country’s gross product grew more slowly than last year. Therefore, the yuan may be under pressure. In addition, there is a risk of deflation.
The yuan exchange rate on Forex is highly dependent on the global economy. If initially this currency was strictly regulated by the National Bank of China, in recent years the Celestial Empire has been working on modernizing the financial system. The national currency is set to float freely. This step is critical to participating in the global economy.
The fact that Beijing has relaxed regulations has added investor interest in the yuan. It also increased its volatility. This may worry traders.
The yuan exchange rate forecast for 2023 depends on what happens to the global economy. If it grows, investors will have free capital, which they will invest, including in China, the second economy in the world. To invest in local assets you need to buy yuan. This means that the quotes of the Chinese national currency will go up.
If the world economy begins to slow down,the yuan exchange rate forecast changes to negative. Large players are less likely to find funds to invest in the national currency of the People’s Republic of China.
Another factor on which the yuan exchange rate forecast for the year depends is China’s relations with other countries. A trade war leads to additional duties and friction among market participants. All this is hitting the Chinese economy. The price of the yuan is falling.
Geopolitical situation can also have an impact on quotes. Crises, sanctions, conflicts, and political opposition create uncertainty in the market. Investors will try to sell the yuan in order to store their assets in more reliable and stable financial instruments.
Yuan exchange rate forecast for 2023–2024
Until the end of 2023-it a couple of months left. This is exactly the period when countries collect their tax harvest and report on the state of the economy. China is among them.
Therefore, the forecast for the yuan exchange rate for the rest of 2023 is in most cases with a “plus” sign. Many exporters will convert foreign currency earned abroad into domestic Chinese currency in order to pay taxes. This will increase demand for the yuan and boost its value.
Importers can start toopurchase currency to pay for goods during the holiday period. Considering that a significant portion of all goods on the planet are made in China, the local budget will receive an additional influx of funds.
According to some experts, the yuan could reach $1.5 per 10 by the end of 2023. At the same time, most analysts believe that in 2024 the Chinese national currency will be stable or even grow. Prerequisites:
- positive macroeconomic situation in China;
- export growth;
- strengthening positions in the global market;
- stabilization measures by the government;
- protectionism among partner countries, which will lead to a renewal of currency parities.
Simply put, optimistic analysts believe that China’s economy will grow. This will raise the yuan. His trading partners will try to change the balance in their favor. This state of affairs will put pressure on the national currency of China.
Optimists predict that the yuan will not only be unstable. It will start to fall. Their arguments are problems in the economy:
- Decrease in investment level. From a geopolitical point of view, China’s current actions are forcing its partners to look for more reliable, neutral platforms for cooperation. The situation around Taiwan and fears that China might use force are making investors wary of local markets.
- Debt load. China’s external debt reaches $2.5 trillion. Although this is noticeably lower than the leaders of the list, it continues to rise. This could have a negative impact on demand in China.
- Slowdown in GDP growth. Although China’s economy has shown growth, it is very far from previous indicators. In the third quarter of 2023, GDP did not even reach the indicators for the same period in 2022.
Despite this, there are fewer minor sentiments than optimistic ones.
Forecast of the yuan to ruble exchange rate for 2023
The entire 2023 yuan only grew in price against the Russian ruble:
- Начал с ₽ 10.11 за Н 1.
- It moved upward until October 2023. At that time, the national currency of the People’s Republic of China was worth about ₽13.585. But since then it has declined.
Now for Ұ 1 they are asking ₽ 12.76. The trend is stable. According to analysts, the yuan will consolidate in the ₽ 12.30–12.60 corridor until the end of 2023. In 2024, the values will be: ₽ 12.20–12.90. Nobody expects growth.
The strengthening of the position of the national currency of the People’s Republic of China in relation to the Russian ruble is connected not only with the fact that the former fell into the side corridor. The ruble began to strengthen. Mainly against the backdrop of high hydrocarbon prices.
The regulatory measures that the Russian government is taking to curb the course are having an impact. Firstly, all companies producing and selling oil and gas abroad are required to store their earnings in foreign currency in Russian banks. Moreover: 90% of it must be exchanged for rubles. This is a powerful support measure, given that hydrocarbons are the country’s main export.
Rating Forex comment: the Russian government is expected to strengthen regulatory measures. They will try to keep the ruble at ₽ 88–94.
Is it worth investing in Yuan?
The yuan began to lose ground against the dollar. This is a good time to add it to your investment portfolio.
The exchange rate of China’s national currency has reached its lowest level in the last 13 years. This can be considered a strong level of support. There is a possibility: China will not want to weaken its currency even further and will take measures to strengthen it. There is a good opportunity to make money from rising quotes.
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