UBS: US and China agreed to keep Yuan stable

Union Bank of Switzerland’s analysts note as per the recent trade negotiations between the US and China, they have tentatively agreed to keep the yuan stable.

Key Quotes

“We see reasons why it is likely to weaken later in the year.”

“In short, reports of a currency deal in US-China trade talks are in line with CIO's expectations for a stable USD/CNY rate in short term.”

“Over a longer horizon, the yuan’s bias remains tilted to depreciation, & CIO is keeping our USD/CNY target of 7.0 over 6 & 12m.”

“We continue to recommend that investors reduce their CNY long exposure and eliminate unnecessary currency risks.”