The Chinese yuan experienced a volatile year but ended nearly where it started and analysts project only slight further weakening in 2020.
The yuan is projected to end 2020 at 7.1 against the dollar, according to the median forecast of a «Bloomberg» survey, marking a 2 percent drop from current levels.
The yuan experienced its fair share of volatility in 2019, weakening beyond the key level of 7 per U.S. dollar for the first time since the crisis in the midst of an ongoing dispute between the world’s two largest economies. But in the backdrop of an initial trade agreement, the yuan gained 2.6 percent to close the year with the smallest annual move for the currency in seven years.
Despite a challenging year for China, especially in fixed income, the outlook for local government financing vehicles (LGFV) remains bright with eight out of 18 analysts and portfolio managers in a Bloomberg survey ranking it as a top investment opportunity. Despite a record year for corporate bond defaults in China at nearly 18.6 billion, according to Fitch, respondents expressed confidence in the ability of LGFVs to avoid bad loans with two-thirds expecting no defaults in 2020.
