By Judy Chen
Jan. 12 (Bloomberg) -- China will keep the yuan trading within a narrow range against the dollar in 2009 on concern renewed appreciation will hurt exporters at a time of shrinking global demand, Goldman Sachs Group Inc. said.
The yuan has remained little changed since the end of July as the People’s Bank of China pledged to pursue a stable currency while a credit crisis triggered recessions in the U.S., Europe and Japan. China’s exports fell 5.3 percent in December, the most in almost a decade, according to the median forecast of economists surveyed before a government report this week.
The central bank “will likely keep the yuan close to a peg against the dollar,” Helen Qiao and Song Yu, Hong Kong-based economists at Goldman, wrote in a report today. “This is viewed as a critical issue for trade development in the face of unprecedented uncertainties in the global economy.”
The yuan’s 21 percent gain since the end of a fixed exchange rate in July 2005 has squeezed exporters’ profits and made Chinese products more expensive for overseas buyers. The slide in exports is undermining Premier Wen Jiabao’s target of sustaining economic growth at more than 8 percent a year.
Goldman’s analysts predict the yuan will trade at about 6.87 per dollar in three, six and 12 months, compared with 6.8389 as of 9:35 a.m. in Shanghai. China’s customs bureau may release December trade figures as early as today.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net
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