Analysis Of The Trend Of The US Dollar Against The RMB Exchange Rate, The RMB Is Expected To Rise To 6.5?

UBS reported that China and the United States have continued to conduct trade negotiations and consultations in the past two weeks. It is expected that the two sides will not raise the tariff rate after the deadline of March 1. The two sides will continue negotiations and reach an agreement at the next "Study Conference". The possibility is improving.

The report also pointed out that "if China and the United States reach a broader framework trade agreement, China may promise not to lead to a sharp depreciation of the renminbi, and market sentiment may also be improved, which may push the renminbi against the US dollar to rise to 6.5, but unless the euro There has been a major change in the trend against the US dollar, and we expect the US dollar against the RMB exchange rate to fluctuate between 6.6-7 this year."

The report also said that if China and the United States can reach a broader framework trade agreement, especially if it can gradually reduce or cancel some of the previously imposed tariffs, this year's export and GDP growth may be stronger than earlier forecasts. However, there is still the possibility of upward tariffs in the future, and the United States may still continue to restrict imports of Chinese technology products, which will curb domestic capital expenditures.

The UBS Asia Pacific Strategy Team is optimistic about the Asia Pacific stock market. Despite the recent rebound, under the baseline scenario, the MSCI Asia Ex-Japan Index still has 11% upside potential compared to the year-end target (715). Among them, the Chinese market has always been at the core (based on the current reasonable valuation, the expectation of the first quarter economic downturn and policy easing, UBS Asia Pacific strategy team has upgraded China to overweight in November last year). If the trade negotiations achieve positive results (although investors have certain expectations), the Fed's position is more moderate, and the economic data is better than expected, the North Asian market stock market may continue to improve.

In terms of China's stock market, UBS pointed out that “if the outcome of trade negotiations is more positive than expected, the positive sentiment of China's stock market will be supported and even further boosted in February. The impact of individual stocks obviously depends on the details of the negotiations. At present, we are optimistic about the benefits. In the Sino-US trade negotiations, we have achieved more than expected results. However, from our exchanges with investors, with the arrival of the March annual report season, weak performance and profit-taking/downside fluctuations still worry."


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