There are many reasons to lie awake worrying about the Chinese economy. A big devaluation of the yuan is not one of them.

Chinese leader Xi Jinping’s paramount goals are to strengthen national security and shore up the Communist Party’s legitimacy. To achieve them, he badly needs to put growth on a sustainable path without adding to the country’s already excessive debt.

Sanctioning a sharp drop in the Chinese currency would serve neither purpose. Rather, it would likely trigger a protectionist response by China’s trading partners, incense China hawks in the U.S. in an election year, and undermine Beijing’s efforts to promote the yuan as a reliable global alternative to the dollar.

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Indeed, given that markets are overwhelmingly positioned for the yuan to suffer at the hands of a resurgent dollar, we think a contrarian bet on yuan resilience has better odds than a wager on a major devaluation. Yet many in the markets seem to expect one. Asian currencies have suffered in recent months in the face of a strong dollar, prompting speculation that a new currency war may soon kick off, led by a devaluation of China’s yuan.

On the face of it, the case against the yuan looks compelling. China’s economy is struggling for many reasons, prominently including the end of a decades-long property boom, while the U.S. goes from strength to strength. Bond yields are much higher in the U.S. than in China, and Federal Reserve Chair Jay Powell confirmed on May 1 what the market suspected: U.S. interest rates are poised to stay higher for longer.

The yen has slid this year to its lowest level against the dollar since 1990. Yuan bears have also taken heart from that. For how long, they ask, will China sit idly by and watch Japanese exporters gain a significant competitive advantage?

The answer is to be found in China’s currency management over the past 30 years. First during the 1997 Asian financial crisis and then during the 2008-09 global financial crisis, Beijing resisted calls to help China’s economy through devaluation because it reckoned it would reap greater long-term rewards by maintaining the yuan’s value.

The considerations are similar today. In the context of heightened great-power competition with the U.S., Xi surely judges that it is not in China’s strategic interest to devalue the yuan sharply. Doing so would go down in Washington like a red rag to a bull and set back Beijing’s efforts to push for greater use of the currency in the Global South.

From a domestic economic perspective, too, China’s stated aim of tilting its economy away from excessive reliance on exports toward consumer-led growth wouldn’t be served by dramatically cheapening the yuan—even if it delivered a short-term shot in the arm.

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So it is that over the past nine months, despite downward market pressure, Beijing has essentially repegged the yuan against the dollar. In the process it has quietly dropped the crawling peg mechanism in place since bungled exchange rate reforms in 2015 triggered a run on the currency.

In practice, the yuan is allowed to move within a band of 2% above or below a central parity rate set by the People’s Bank of China, the central bank, based on a daily weighted average of prices given by market makers.

Speculators intent on taking on the PBOC and trying to break this de facto peg face a tall order.

The central bank is currently sitting on $3.2 trillion of foreign exchange reserves, which covers more than a year’s worth of imports and is more than twice China’s short-term foreign-exchange debt. The PBOC could defend the yuan for at least 18 months were there to be capital outflows on the scale of 2015-2016.

Intriguingly, despite the pressure on the yuan, China’s foreign-exchange reserves have risen by $86 billion in recent months. That’s because the PBOC has been able to get China’s state-owned banks to intervene in the yuan’s defense on its behalf, without spending official reserves. In other words, the reserves data grossly underestimate the firepower at Beijing’s disposal.

Ironically, for all the market chatter about a Chinese devaluation, our new yuan forecasting model shows that the currency was fairly valued in the first quarter of this year, taking into account fundamental factors such as inflation and interest rate differentials between the U.S. and China. Our model also incorporates a measure of economic and geopolitical uncertainty.

The latest U.S. inflation and spending data have led to investors anticipating a broad increase of around 5% in the dollar in the next six months.

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In the context of dollar strength, it’s easy to see emerging market currencies in retreat. But these are precisely the circumstances in which Beijing has made it a point in the past to project yuan stability.

Also, China’s economy did better than expected in the first quarter and could continue to do so in the next quarter or two, while inflation differentials remain in favor of the yuan.

That’s why our core view is that the yuan will remain broadly stable for the rest of the year, with any depreciation unlikely to exceed 2-3% from current levels. Beijing has no strategic, geopolitical appetite for a weaker currency.

And if the dollar’s fortunes change and China’s economy keeps beating expectations, the yuan could even surprise on the upside. A bet on that happening is not as far-fetched as it sounds.