Yuan set to regain strength

MARKET watchers predict the yuan to recover later this year as a rebound in the United States dollar is expected to lose steam.

The Chinese currency’s appreciation will continue later this year, said Jan Lambregts, a Rabobank economist. He said the government’s control of inflation and a long-term move toward a more flexible exchange rate regime will also back the yuan to climb later this year.

China’s consumer price index, the main gauge of inflation, slowed to 4.9 percent last month from 6.3 percent in July. But the producer price index inched up to 10.1 percent from July’s 10 percent.

Lambregts said the yuan may gain 8.2 percent for the whole of this year, with the currency’s rise slowing to 4 percent next year.

As soon as there is a pause in the US dollar’s rise globally, the People’s Bank of China, the central bank, may take the opportunity to allow the yuan to resume its gradual climb, according to traders

Source: China Daily

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