The yuan’s rally has more room to run as China’s economic recovery picks up, according to Goldman Sachs Group Inc.

The currency will advance about 1.5 percent to 6.6 a dollar in the next 12 months, said MK Tang, chief China economist at Goldman Sachs in Hong Kong. That’s slightly more bullish than the brokerage’s 6.7 forecast in January.

'The economy will show solid signs of recovery,' Tang said, citing stimulus measures rolled out since last year and a pick-up in infrastructure investments as reasons economic expansion will get a boost in the coming months.

Early indicators have flashed the first signs of an economic recovery after months of slowdown, and China’s credit growth surged to a record in January. The People’s Bank of China cut lenders’ reserve requirement five times since the start of 2018 in a bid to boost growth.

Goldman’s view is at odds with analysts at NatWest Markets and Commerzbank AG, who say the yuan is likely face depreciation pressure as fundamentals remain weak and current account surplus shrinks.

China will keep the yuan basically stable at reasonable levels and will increase the flexibility of the exchange rate, the nation’s top economic planner said in report released Tuesday during the National People’s Congress in Beijing.

The yuan has surged 2.6 percent in 2019 as the best-performing currency in Asia, after tumbling more than 5 percent last year. It rose 0.13 percent to 6.7016 a dollar as of 5:36 p.m. in Shanghai.

Here’s what else Tang had to say on the yuan and the economy:

• The currency will trade at 6.65 a dollar in three months; other factors supporting it are the central bank ensuring a stable exchange rate and trade talks with the U.S. stoking investor optimism
• The central bank may manage the yuan with a stronger bias in daily fixings if policy easing triggers depreciation
• Slower growth in exports, consumption and companies’ capital expenditures will continue to be a drag on the economy
• The PBOC will aid growth by injecting cash in its daily open-market operations and cut lenders’ reserve requirement once in the second quarter
• The PBOC won’t reduce the benchmark interest rate, but will guide the money market rates lower; the weighted average seven-day repurchase rate will stand at 2.25% by the end of the second quarter
• China will see more capital inflows into stocks and bonds due to global index inclusions; the authorities may rein in appreciation by easing capital controls, if inflows are too strong