China yuan forecast to appreciate to 5.7 versus the US dollar in 2017

Caixin online – China’s currency will gradually appreciate against the U.S. dollar by nearly 10 percent over five years, a report by a private think tank predicts. In 2017, the exchange rate of the yuan against the US dollar would be 5.7, up about 9.5 percent from the current 6.3 level, Beijing-based West Brothers Economic Research Institute said.

The result is based on the assumption that the country’s economy will keep growing at 7.5 percent per year over the next five years, compared with 2 percent in the United States.

Considering the ongoing process of urbanization and regulatory reforms, the Chinese economy still has better growth momentum than most developed economies, the report said.

Other factors supporting a stronger yuan include anticipated difference in interest levels between China and countries where loose monetary policies are depressing bank deposit returns.

So-called quantitative easing in the United States is also driving international flows of capital into China. In addition, the appeal of the yuan as an investment vehicle is growing globally and attracting more foreign investors. Therefore, the yuan’s appreciation is far from approaching an end, the report said.

The West Brothers Economic Research Institute website

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