China’s recent devaluation of the renminbi is crucial to economic restructuring, according to Standard & Poor’s Ratings Services (S&P).
Paul Gruenwald, S&P chief economist for Asia Pacific, said Beijing is unlikely to weaken the currency any further, although it might allow a wider trading band and more volatility.
However, any such move will not trigger a currency war because the devaluation will not significantly ramp up exports, Gruenwald was quoted as saying by the Hong Kong Economic Journal.
He said the renminbi will be supported at 6.45 yuan against the greenback.
Gruenwald maintains an “AA-” rating for the country’s sovereign debt.
Meanwhile, Morgan Stanley currency strategist Hans Redeker said the weaker yuan will hurt China’s export rivals.
These include South Africa, Brazil, Thailand, Singapore, Taiwan, Chile, Columbia, Russia, South Korea and Peru.
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