FXStreet reports that Economist Ho Woei Chen, CFA, and Senior FX Strategist Peter Chia at UOB Group believe the Chinese currency faces prospects of further upside this year.

“The CNY stays strong against the USD in the new year, gaining close to 1% at about 6.47 /USD year-till-date. This comes amidst a recent recovery of the broad USD against most G-10 and Asian FX underpinned by higher US Treasury yields. For 2021, we reiterate our view of further gains in the CNY backed by expectations of a sustained recovery in the Chinese economy this year together with stable monetary policy from the PBoC.”

“Overall, we expect the CNY to strengthen further to 6.35 /USD by 3Q21, a level last seen in May 2018 before the onset of the US-China trade conflict. Lastly, a key risk to our positive outlook on CNY is a further deterioration of US-China relations under the incoming Biden administration.”