Weaker yuan seen in 2015

China Daily (Canada) - - FRONT PAGE - ByWUYIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

The yuan may de­pre­ci­ate about 2 per­cent against the dol­lar this year amid China’s eco­nomic slow­down, said a re­port re­leased on Wed­nes­day in Shang­hai.

“With ro­bust eco­nomic growth, strong ex­pec­ta­tions of ris­ing in­ter­est rates and lag­ging eco­nomic re­cov­er­ies in many other coun­tries, the US dol­lar will fur­ther strengthen and ap­pre­ci­ate against the yuan,” said an an­nual ex­chang­er­ate re­port by Chen Xue­bin and Li Hua­jian, re­searchers at the In­sti­tute for Fi­nan­cial Stud­ies at Fu­dan Univer­sity.

The re­port said the yuan’s value against the dol­lar­may fluc­tu­ate by4 to 5 per­cent in 2015 amid un­cer­tainty over global eco­nomic con­di­tions.

The eu­ro­zone coun­tries have been re­cov­er­ing slowly, which may not fun­da­men­tally change the slug­gish trend of the euro in 2015. the re­port said.

As the yuan might be in­cluded in the In­ter­na­tion­alMone­tary Fund’s Spe­cial Draw­ing Rights re­serve as­set (ef­fec­tively a bas­ket of re­serve cur­ren­cies), in­ter­na­tion­al­iza­tion of the cur­ren­cy­may take a big leap in 2015, said mar­ket in­sid­ers.

“As the ren­minbi has great prospects of be­ing in­cluded in the SDR, mount­ing num­bers of in­vestors have been keen to invest in the cur­rency, which will also help ac­cel­er­ate China’s fi­nan­cial mar­ket re­form,” said Nathan Chow, an economist at DBS Bank Ltd.

He said more poli­cies are ex­pected to ad­dress the de­mand for in­ter­est rate lib­er­al­iza­tion, a re­vised ex­change-rate mech­a­nism and ren­minbi cap­i­tal ac­count lib­er­al­iza­tion in the near fu­ture.

“This year­may see great changes in the ren­minbi’s role in the global econ­omy and China aims to make the yuan a sig­nif­i­cant cur­rency in global trans­ac­tions,” said Chow.

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