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SHANGHAI, Feb 7 (Reuters) – The Chinese language authorities might take additional measures if wanted to maintain the yuan secure, doubtlessly placing downward strain on the foreign money, a former overseas change regulator stated.
Policymakers might enhance yuan’s flexibility, broaden capital outflows, or management capital inflows to rein within the yuan, which might deviate from financial fundamentals within the quick time period, wrote Guan Tao, world chief economist at BOC Worldwide and a former official on the State Administration of Overseas Change (SAFE).
The yuan additionally faces downward strain from a number of market elements, together with additional strengthening of the greenback index, the shrinking unfold between U.S. and Chinese language yields, and the narrowing distinction within the progress between the 2 economies, Guan wrote in an article revealed within the Shanghai Securities Information on Monday.
Guan, who beforehand headed SAFE’s steadiness of funds division, stated that the yuan is already shedding some momentum, citing shrinking buying and selling volumes within the interbank foreign exchange market.
China’s yuan hit a close to four-year-high towards the greenback on Jan. 26 and an index monitoring yuan’s worth towards a basket of currencies (.CFSCNYI) is flirting with the best degree since late 2015.
China has already taken some measures, together with directing monetary establishments to carry extra overseas change in reserve, to decelerate yuan’s fast appreciation.
Reporting by Shanghai Newsroom; Modifying by Sam Holmes
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