Chinese Yuan Headed for Record Lows Against U.S. Dollar Amid Threat of Tariffs, Warn Investment Banks
Investment banks are predicting that the Chinese yuan will sharply fall on the probable new U.S. tariffs from the administration of President-elect Donald Trump. The tariffs might reach 60% on the imports from China, pushing the yuan to record lows; projections have been made of USD/CNY reaching 7.51 by the end of 2025. Goldman Sachs and Morgan Stanley are expecting significant impacts on the economy, with China's central bank taking to policy easing to keep the damage at a minimum. This is a critical period for China's currency stability as trade tensions increase.

"Investment banks predict the Chinese yuan will hit record lows as U.S. tariff threats loom, with USD/CNY expected to weaken to around 7.51 by 2025."
The Chinese yuan is set to plunge, with investment banks forecasting increased U.S.-China trade tensions after the surprise win of U.S. President-elect Donald Trump. His administration is expected to put tariffs as high as 60% on Chinese imports, which could force the yuan to its lowest levels in decades. Analysts predict the offshore yuan to depreciate to about 7.51 per dollar by the end of 2025, its weakest since 2004.
Investment Bank Projections
- Goldman Sachs: Thinks that the USD/CNY could go up to 7.40-7.50 if tariffs are aggressively increased and might cut 0.7 percentage points off of China's GDP.
- Morgan Stanley: It notes that reduced Chinese trade exposure to the US, along with continuing shifts of supply chains, will make a less steep decline likely and yet still forecasts sharp depreciation.
- Barclays: Warns that US tariff policies could maintain upward pressure on the dollar, pushing the yuan toward further declines.
Implications and Policy Responses
The People's Bank of China, the central bank, is expected to implement monetary and fiscal easing to stabilize the yuan and cut capital outflows. However, further devaluation may challenge broader economic stability in China and underline the tightrope that policymakers will have to walk during this period of geopolitical tension.
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