MUFG analysts Lin Li and Khang Sek Lee have reiterated their forecast for the Chinese Yuan, expecting the USD/CNY exchange rate to reach 6.65 by the end of 2026 [1]. This outlook comes despite July data indicating a slowdown in China's overall economic momentum, with declines observed in industrial production, retail sales, fixed asset investment, and key property activity indicators [1]. The analysts note that short-term production disruptions were caused by renewed risks of conflict in the Middle East and extreme weather events such as typhoons, heavy rainfall, and heatwaves. However, they emphasize that the primary concern remains persistently weak demand, which underscores the need for additional policy stimulus [1].
MUFG suggests that the Chinese government may respond by accelerating project pipeline development and speeding up the disbursement of funds, with expectations that infrastructure investment will pick up from September onwards [1]. Despite the current economic headwinds, MUFG maintains its view of a gradual appreciation of the Yuan over the next two years [1].
No immediate market reactions or analyst opinions beyond MUFG's forecast and policy expectations are discussed in the article [1].
CONCLUSION
MUFG continues to project a gradual appreciation of the Chinese Yuan, targeting USD/CNY at 6.65 by end-2026, despite recent signs of weaker economic growth. The outlook is contingent on anticipated policy stimulus and increased infrastructure investment from September onwards.