Yuan’s Rally to Three-Year High Is Enough for AllianzGI for Now

Allianz Global Investors has scaled back some of its bullish yuan position and turned neutral, taking profits after a rally that has made the Chinese currency Asia’s best performer this year.

The onshore yuan climbed to the highest in over three years versus the dollar on Monday, helped by a weaker greenback and the Chinese central bank’s willingness to tolerate more strength in its currency.

The fund manager, which oversees about 598 billion euros ($693 billion), trimmed some of its positions that were betting on a stronger yuan and weaker Asian currencies around two weeks ago. The shift stands in contrast to a wave of bullish calls that are betting on more gains for the yuan.

“Given how well the renminbi has done this year, we prefer to go back to neutral for now,” Ze Yi Ang , a senior portfolio manager based in Singapore, said in an interview. He said AllianzGI would consider re-entering the trade if the yuan moves toward 6.8 per dollar. The currency closed at 6.7568 per greenback on Monday.

The move reflects a broader reassessment of haven trades as prospects for a US-Iran accord ease geopolitical risks. That may pave the way for a rebound in more battered Asian currencies, shifting investor focus back to valuations and domestic factors after the yuan’s strong rally.

If the US-Iran conflicts ends, “we do expect more beaten-down currencies, the more vulnerable ones, to rebound stronger than the renminbi,” Ang added. “So from a pan-Asian point of view, if you want to take exposure, we can also look for opportunities in other currencies.”

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