Yuan faces stronger depreciation in H2 2021 – China Press

Dhwani Mehta FXStreet

The Chinese yuan is likely to remain vulnerable to downside pressures in the second half of this year, as the US dollar may rebound on accelerated recovery and tightening of monetary policy, the PBOC-run newspaper Financial News reports, citing analysts.

Key quotes

“The Federal Reserve is expected to release a signal of QE reduction in Q3 amid increased inflation, and China will not follow up any interest rate hikes quickly, possibly leading to further narrowed spread over the two countries' interest rates, or even a reversed spread that may push the dollar stronger.”

“The US and other developed countries are expected to basically achieve herd immunity in Q3, and the growth gap may narrow if the Chinese economy slows down in H2 while the US recovery speeds up.”

Fed to keep flexibility on tapering at the meeting – Morgan Stanley

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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