“Investors are underestimating the strength of the resilience over the next few months.
Kathy Lien
BK Asset Management
“We are just starting to see a recovery in currencies,” Kathy Lien, managing director of forex strategy at BK Asset Management told CNBC.Asian street signs” on Thursday. She said the Chinese currency could strengthen further to 6.8 against the US dollar.
The coin weakened to 7.3 against the greenback in early November, its weakest since January 2008. However, it quickly recovered to 6.96 within about a month. as Chinese health authorities continue to announce further easing measures.
“Investors are underestimating the possibility of a strong recovery over the next few months,” Lien told CNBC, ahead of the expected release of a slew of Chinese economic data next week, including manufacturing. industrial and retail sales.
“We’ll see what the Chinese data is weakening, turning into something more positive surprise,” she said. “That will renew demand for the Chinese yuan and push the yuan higher than it is now.”
forward growth
China’s pivot away from its Covid-free policy has played a big part in optimism about the country’s recovery.
Lien said Beijing lifted restrictions “quite quickly” and that increased demand for the yuan accompanied the easing measures earlier than expected.
HSBC chief economist for Greater China Jing Liu said the lifting of restrictions would boost growth further.
“Increased easing in COVID-19 prevention measures, coupled with more proactive supportive monetary and fiscal policies, could help deliver growth above 5% by 2023,” she said and It added that the latest adjustments in policy would “pave the way for further easing”. .”
The woman holding the Chinese Yuan banknote in this illustration taken on May 30, 2022.
Dado Ruvic | Reuters
Lien of BK Asset Management said clarity in China’s health measures going forward is what could spur investors back into the Chinese market.
“There’s been a lot of uncertainty over the past months, especially over the past few weeks, about how China will handle the protests,” Lien said.
“A lot of businesses have started rethinking their plans and I think everyone is looking forward to a longer period of Covid-free policy,” she added.
