Caixin
Nov 18, 2016 05:51 PM
ECONOMY

Yuan Could Fall to 7.5 to the Dollar Next Year, says UBS

The value of the yuan could fall to 7.5 against the U.S. dollar by 2017, UBS Securities analysts said in their 2017-2018 China forecast.

Pressure from the dollar's appreciation, continued high capital outflows and a Trump presidency could see the yuan continue its downward slide.

As of Friday morning, the yuan stood at 6.89 against the U.S. dollar, after dropping for nine consecutive days and rebounding briefly on Thursday.

China's gross domestic product growth is predicted by UBS to decline from 6.7% this year to 6.4% in 2017 and fall further to 6% in 2018, due in large part to slowing growth in construction and real estate-related investments.

UBS analysts also said that domestic commodity prices will probably not increase as sharply next year as they did this year, but China's Producer Price Index will still show some positive growth of around 1.7%. This is expected to boost the revenues of industrial enterprises, helping them to repay debt.

At the same time, UBS said rising prices in the metals and mining industries could push up costs for China's businesses.

Contact editor Ken Howe (kennethhowe@caixin.com)

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