The People’s Bank of China is likely to cut the reserve requirement ratio for lenders by a minimum of 0.5 percentage point in two to three weeks and lower its interest rates one more time in the short term, said Andrew Fung Hau-chung, executive director and head of global banking and markets at Hang Seng Bank Ltd. (00011.HK).
Meanwhile, the US Federal Reserve is expected to lower its key rate by December, Fung told the Hong Kong Economic Journal.
He also said the renminbi pool in Hong Kong will continue to shrink this month.
Fung, however, expects the yuan exchange rate to remain stable at between 6.34 and 6.42 to US$1 before it is added to the International Monetary Fund’s special drawing rights basket.
On the other hand, David Woo, managing director and head of global rates and currencies research at Bank of America Merrill Lynch, sees a further 10 percent decline in the renminbi exchange rate, partly as a result of the country’s monetary easing moves.
The renminbi became the world’s fourth most frequently used payment currency in August, with a market share of 2.79 percent, surpassing the Japanese yen by 0.03 percentage point, data from SWIFT shows.
The Hongkong and Shanghai Banking Corp. Ltd. deputy chairman and chief executive Peter Wong Tung-shun expects the use of renminbi to flourish as the country pursues its financial reform and “one belt, one road” initiative.
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