UBS maintains Chinese yuan forecast amid coronavirus outbreak
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E-mail Xinhua, February 4, 2020
Global investment bank UBS, despite the shock of the coronavirus, maintained its forecast of yuan-dollar rate at 7 yuan per U.S. dollar for end-2020.
"China's commitment to a stable exchange rate and expected improvement in current account surplus should help support the currency," UBS said in a research note Monday.
The investment bank expects the improvement in the current account to come from contraction in services trade, with a 50-percent drop in inbound tourism and a 30-percent decline in China's outbound travel in 2020 as a whole.
UBS also maintained its forecast of China's CPI inflation unchanged at 3.3 percent in 2020.
While food prices and prices of some other essential goods may rise more than usual due to transport disruptions, according to UBS, weaker consumer demand will likely push down prices of other products.
Despite negative impacts on consumption from the virus outbreak, "China's long-term trends of moving toward a more consumption-oriented economy of rising services share in the overall economy and technological upgrade should continue as well," UBS said.
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