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"The yuan will become stronger against the US dollar"

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• The Chinese yuan, which has now declined by 5 percent against the US dollar, will stabilize and gain strength against the US dollar by the end of the year. That claims HSBC, the largest bank in Europe.

• The Chinese currency is expected to evolve towards a ratio of 6.7 yuan per US dollar towards the end of this year. That is an increase of 2 percent compared to the current level, so the Chinese economy will 'recover' in the coming months.

• HSBC, Europe's largest bank, believes that price fluctuations on the financial markets are driven by negative sentiment caused by the trade war between the United States and China. According to HSBC, the reaction is exaggerated and not representative.

"We think that the market is currently projecting a pretty pessimistic scenario."

 

Uncertainty

 

• Although there are a number of other banks that share the opinion of HSBC, there are also a handful of analysts from JP Morgan, UBS and ING who use a different outlook for the yuan. They describe the trade tensions as a major uncertainty for the Chinese currency exchange rate.

• ING even claims the opposite of HSBC and expects the yuan to fall against the US dollar to a level that we have not seen in the past 10 years.

• The People's Bank of China took extra measures last week to stabilize the yuan. Banks now have to set aside reserves equal to 20 percent of their turnover. This makes it more expensive and difficult for investors to respond to the depreciation of the yuan.

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Sources: CNBC