The offshore yuan which trades outside the Chinese mainland has been trading above 7 per USD since February 18th, a level not seen since early December, due to concerns about the coronavirus impact on the economy. The IMF recently warned that the virus epidemic will likely drag down China's GDP growth to 5.6% this year although the central bank has been cutting key borrowing rates and injecting money into the financial system, in an attempt to to support the economy. 7 per USD is a key psychological level and seems to be an inflection point for the currency. The yuan strengthen in early December as trade tensions between the US and China eased.
Historically, the Chinese Yuan reached an all time high of 8.73 in January of 1994.
The Chinese Yuan is expected to trade at 7.03 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 7.11 in 12 months time.