SHANGHAI, Dec 7 (Reuters) - Global investment banks see
the yuan facing continued downside pressure in the first half of
2024 before turning around over the following six months on
views that the U.S. Federal Reserve will begin to cut interest
rates by then, forecasts show.
    With China's economic recovery sputtering and the U.S.
dollar surging until recently, the yuan has had a
volatile year, having weakened 6.14% to the dollar at one point
before giving back much of the losses.
    The onshore yuan last traded at 7.1505 per dollar on
Thursday and was down 3.5% so far this year. 
Here is a summary of some forecasts for the Chinese currency:
 INVESTMENT HOUSE    Q1-2024   Q2-2024  Q3-2024   Q4-2024
 Societe Generale         7.5      7.5       7.4        7.3
 Citi                7.10                         7.25
                     (0-3                         (6-12
                     months)                      months)
 MUFG                    7.05     6.95      6.85        6.8
 OCBC Bank                7.1     7.05         7       6.99
 Oxford Economics                                         7
 Goldman Sachs       7.3 (3    7.3 (6             7.15 (12
                     months)   months)            months)
 HSBC                     7.3      7.3       7.3        7.3
 Mizuho Bank             7.05        7         7       6.95
 Standard Chartered      7.15      7.2      7.15          7
 ANZ                     7.15      7.1      7.05          7
 Morgan Stanley                    7.5                 7.45
 Commerzbank              7.2      7.1         7       6.95
    "While we view the strong policy-driven daily fixes of CNY
as a clear indication of policymakers' desire to reduce
depreciation expectations and manage capital outflow pressures,
we think a more sustained CNY appreciation would require a more
convincing pickup in Chinese growth and improved prospects of
asset market outperformance, which seems hard to envisage amid
mixed activity data, continued property price declines, and
negative inflation. 
    "Such a tepid macro environment in China in contrast to the
strong activity picture we envisage in the U.S., combined with
the continued interest rate differential between the two
countries, will eventually limit the scope of CNY strength, in
our view." 
    "We see CNY staying supported into Lunar Year, but will
likely give up some gains subsequently. Near term, seasonality
is positive into the Lunar New Year holidays."
    "But the yuan may face renewed challenges in H1-24. We see
USD/CNY testing higher in the range of 7.15-35 in H1-24 ... Rate
differential will remain wide with developed market (DM) rates
staying higher and CNY rates lower for longer. 
    "Given difference in economic fundamentals, China inflation
will likely stay structurally lower while DM inflation may stay
sticky, resulting in persistent policy rate difference - even if
the Fed starts cutting next year, USD rates will stay materially
higher than CNY rates by end-2024." 
    "The policy effort of containing CNY depreciation became a
permanent factor in People's Bank of China's (PBOC) policy
toolkit. However, extended monetary policy divergence would keep
pushing the USD/CNY higher until there is a clear sign of a U.S.
Fed pivot. Policy balancing between local rates and FX is likely
to be slightly tilted toward lower local rates at the expense of
a slightly higher USD/CNY."
**  ANZ
    "We expect a turnaround in 2024 to result in a stronger CNY.
The cumulative effects of the stimulus measures that have been
announced, including the recent ones around the property sector,
should start to reflect in better economic data in early 2024. 
    "With the Fed expected to start cutting interest rates by
mid-2024, the USD should continue to correct from overvalued
levels. This will see a return of portfolio flows into the
onshore bond and equity market. The repatriation of past
retained earnings by multinationals should also ease off and
exporters are likely to increase their conversion rate."
    "China's economy has yet to gain a firm footing and this
will continue to pose downside pressure on the yuan in the near
term. Also, even though the negative interest rate differentials
between China and the U.S. have narrowed somewhat recently, they
are likely to persist given the divergent policy directions for
the Fed and PBOC.
    "The yuan will unlikely strengthen substantially as
structural headwinds, including the real estate troubles, will
continue to pose risks to China's growth outlook."

 (Reporting by Shanghai Newsroom; Editing by Emelia