SHANGHAI, (Reuters) – Global investment houses have rushed cut their yuan projections in China as the currency faces its worst month for decades. This is despite a slowdown in China’s economy and heightened expectations of higher U.S. rates.

J.P. Morgan’s yuan forecasts have been cut twice by Standard Chartered (OTC), HSBC, and other analysts on Chinese currencies are also bearish.

Nine banks have a median prediction that the yuan will trade at 6.63 dollars per dollar by the end of the quarter. Most banks expect that the yuan will weaken to 6.71 by the end of the year.

Friday’s 6.7510 dollar mark marked an 18-month high for the yuan.

Standard Chartered revised their June forecast from 6.35 to 6.7 to reflect the fact that “authorities might welcome a weaker yuan in support of growth and exports,” and lowered its end-June projection to 6.7 to 6.7 dollars.

In their last year’s annual outlook, the banks predicted that the Chinese currency would trade around 6.4% at the end of June. This was at a time when China was steadily rising and one of the most performing emerging markets currencies.

The currency’s April 4.6% plunge against the dollar has caused a turnaround. This puts the currency in the most severe monthly slump since China unified official and market exchange rates 1994.

An escalating growth outlook due to COVID-19 lockdowns as well as a widening gap in US policy is expected to cause flows toward dollars over the next few years, according analysts.

“We think the market’s perception of monetary policy divergence Fed/PBOC could reach its maximum level in Q2 or Q3,” said Wang Ju (OTC), head of Greater China FX strategy and rates strategy, BNP Paribas. He was referring to People’s Bank of China.

Wang stated that Fed tightenings risks will likely be priced in, while China’s GDP may bottom out through policy stimulus. Wang also predicted that the Yuan would fall to 6.6 by the end-Q2 and then drop to 6.7 by the end of third quarter.

This is an overview of some predictions for the Chinese currency.

INVESTMENT HOTEL Q2-2022Q3-2022end-2022Q1-2023Q2-2023Q2-2023

ANZ 6.55 6.4

BNP Paribas 6.6.7 6.6

UBS Global Wealth 6.556.56.56.56.56.5

Management

J.P.Morgan 6.7 6.75 6.8 6.8

MUFG bank 6.6 6.65 6.7 6.65

Standard Chartered 6.7 6.65 6.6

HSBC 6.6 6.62 6.65 6.68 6.7

Daiwa Capital 6.9

Märkte

Capital Economics 6.65 6.8 7

Union Bancaire 6.75 6.85 6.95 6.95

Privee