Pound Sterling to Chinese Remnimbi (CNY) Forecast 2015

The demand for offshore renminbi (CNY) was evident in mid-November as a Shanghai-Hong Kong stock-trading programme was initiated.

Adding to buying pressure on the Chinese currency was a regulation allowing Hong Kong residents to purchase the Chinese currency without any restrictions on the amount.

With this pick up in demand for Yuan, what does the picture for 2015 look like?

We hear from Carl Hasty at Smart Currency Business who presents the latest forecasts on where the pound sterling to Chinese Yuan is headed in 2015?

Current Rates

• The Pound to Chinese Renminbi exchange rate (GBP/CNY) is at 9.6247.
• The US Dollar to Chinese Renminbi exchange rate (USD/CNY) is at 6.1425.

Exchange Rate Forecasts for the GBP to CNY

1 month: 9.7920  
3 months: 9.7600
6 months: 9.6465

Why the Stronger CNY Could be Scuppered in 2015

Despite easing currency flows, the Chinese economy continued to battle subpar growth in the past month. With economic growth slowing to a five-year low in 7.3% in the last quarter, the People’s Bank of China (PBC) surprised markets by reducing its one-year deposit rate from 3.0% to 2.75% in hopes of stimulating the economy.

The PBC also cut its one-year lending rate from 6% to 5.6%.

Chinese stocks rose and the renminbi weakened on the back of this news.

Although the forecasts above indicate that the renminbi could strengthen, this latest news suggests that the renminbi could remain weak, but given China’s move towards a free-floating exchange rate, it is trickier to predict what the PBC will do, given the lack of precedence.

As such, UK businesses trading in renminbi or starting to trade in the currency are encouraged to have robust currency strategies in place in order to minimise losses and mitigate risk from a currency that is potentially open to significant volatility.

China also has plans with Russia to make trade settlements in renminbi and roubles, a move which could wrest more influence from the US dollar, particularly in the energy market.

If successful, this could also potentially strengthen the renminbi.