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Yuan's Steady Rise: JPMorgan Sees 10% Long-Term Gain
30 Oct
Summary
- JPMorgan Asset Management anticipates over 10% yuan appreciation long-term.
- Offshore yuan climbed nearly 5% against the dollar this year.
- Internationalization efforts include boosting liquidity and new financial instruments.
China's ongoing efforts to internationalize the yuan have entered a "steady, slow, but nonstop" phase, according to JPMorgan Asset Management. The firm anticipates this trajectory will support further gains for the currency, projecting a long-term appreciation of at least 10% in real effective exchange rate terms.
The offshore yuan has demonstrated strength, climbing nearly 5% against the dollar year-to-date, reaching its highest level since 2022. This appreciation is bolstered by resilient exports, which generate foreign-currency inflows, and Beijing's strategic push to broaden the renminbi's global usage.
JPMorgan Asset Management favors yuan-denominated credit, highlighting that steady currency appreciation can enhance total returns and offer diversification benefits. Beijing's commitment to yuan internationalization is evident through initiatives like increasing yuan liquidity, introducing new financial instruments such as five-year futures, and encouraging cross-border fund flows.
The firm views this internationalization push as irreversible, believing authorities will continue to advance the yuan's global standing despite market fluctuations. This strategic direction is expected to lead to sustained growth in the yuan's international role.
