Our editors conducted a study and noted the strengthening of the positions of the Chinese yuan. Read more about the events and opinions based on which the forecast is based, read further in our article.
Economists predict a global redistribution of macroeconomics. And the Chinese yuan is called the second world currency – the coin of the country with which it is frankly trying to flirt, despite all the sanctions, even America. The stability that reflects yuan exchange rate forecast for 2022is called the Chinese economic miracle: complicated logistics, sanctions measures, stopping tourism could not significantly shake the value of the yuan.
What factors affect the exchange rate of the yuan
External factors affect forecast for the yuan against the ruble for 2022 and its value relative to the dollar, but internal decisions will stabilize the situation. The main factors that peak on the graph are:
- pace of development of the PRC, internal decisions and redistribution of resources;
- customs duties imposed by the United States from time to time;
- development of trade relations with China as a component of import substitution;
- recession in the global economy as a whole.
The most powerful stimulus for strengthening the value was the increasingly common opinion that the yuan will replace the dollar in interstate settlements. Many countries of the Eurasian continent agree to accept this equivalent. The Indian rupee, which is seen as an alternative, cannot compete in terms of the size of economies. That is why the currency is confidently holding the level, and some drawdown against the ruble is associated only with the strengthening of the latter.
The only negative factor that may affect the exchange rate in 2022 may be only a dispute over the territory with Taiwan. Whatever the results of military operations or economic confrontation with the rebellious island, on which some of the key industries for the IT industry of the Russian Federation are located, they will hit the economy. Even small disruptions in supply will stop part of the production, and this will cause a snowball effect. It is impossible to consider the threat as serious, but also discount this factor.
Brief summary of forecasts from major banks
The main development factor for 2022, experts call the increase in the GDP of the DPRK. China has adopted a program of internal development for the next 5 years, one of the key points of which is a plan to strengthen the bathhouse. Banks cautiously predict ruble value growth by 5-15% during the year.
Expert opinions about the course
The Chinese currency is undervalued due to the generally accepted cross-system calculation of the rate. Banks, when analyzing, first evaluate the ruble into dollars, and then also convert the dollar into yuan. The difference is up to 5%, even if you do not count the excess volatility that the US currency has shown since the spring of 2022. Calculating directly on the internal rate will show the real price, and this can cause a jerk. But after it the situation will be much more stable.
Mikhail Shulgin, Head of the Global Research Department at Otkrytie Investments, in his interview gave examples of companies that are already ready to switch to settlements in yuan without intermediary revaluation against the dollar. Supported by the two economies, the equivalents can mutually positively affect the price and strengthen against the dollar. At the same time, a significant drawdown of the ruble is not predicted.
Yuan exchange rate forecast
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Future yuan exchange rate forecast for 2022 table reflects only approximately. It is impossible to take into account political currents or incidents that occur every day. The second economy of the world, which is now China, will inevitably react to any serious event.
Forecast against the ruble
It is much more difficult to predict the ratio of the yuan and the ruble, since both currencies are in an unstable situation. The ruble is largely dependent on the sanctions and the reaction to them from the government of the Russian Federation, and China is building up its economy at the expense of foreign companies that have left the territory of the Russian Federation. China plays a key role in the import substitution chain in the technical industry. It is also important that China did not support anti-Russian sanctions, although it did not show any intention to actively support them. Neutrality in this case ensures stability – the projected growth during 2022 is 15-20%.
Forecast against the dollar
Yuan exchange rate forecast for 2022 even more favorable against the dollar. Even taking into account the active phase of preparation for hostilities, the rate showed an increase of 2.5%. This makes it possible to calculate further progress. The solution of the geographical issue and the increase in trade should cause the strengthening of the national currency of the Middle Kingdom. At the same time, China will not allow a collapse in the exchange rate – there will be enough internal reserves to keep it afloat in any situation to prevent a failure.
Active development is also not yet to be expected. China needs to improve logistics and consider the mutual cooperation projects proposed by Russia. Resources will be required to launch them, while profits can only be expected by 2024. The progress shown at the end of the year (2.2% growth) can be considered relevant. It will most likely continue into 2022.
Yuan to save from inflation
In the long term, the yuan looks promising. But do not forget about the maximum possible jumps:
- issuance of co-branded cards and emphasis on international transfers;
- military clash in Taiwan;
- revaluation of the value due to the purchase of the yuan by states for direct settlements.
In this case, profit cannot be guaranteed. If there are no plans for a long stay in China and purchases directly in yuan, it is too early to stock up. There are currencies in the world, the risks for which are much less.
The materials presented in this section do not constitute individual investment advice.