Financial sector professionals mostly expect China’s renminbi to weaken in the next three months, with the unit seen hitting the 6.55 level against the US dollar by the end of March.
In a survey conducted by Standard Chartered Bank (Hong Kong) on 173 financial chiefs and senior executives from Asia, Europe and the United States, forty-four percent of the interviewees were of the opinion that the Chinese currency will depreciate in the next three months.
Forty-two percent of the respondents, meanwhile, said they expect the renminbi to stay flat at the current level, the Hong Kong Economic Journal reported.
The Chinese unit softened to a three-month low of 6.495 offshore at one point on Tuesday before closing at 6.4179, the weakest finish since August 2011.
The renminbi’s slide came against the backdrop of poor foreign trade data released by Beijing.
The disparity between the exchange rate of the onshore and offshore renminbi, meanwhile, widened to over 700 basis points.
Kelvin Lau, senior economist at Standard Chartered, said he expects the difference between the two rates to continue to widen amid pressure on offshore renminbi liquidity.
Nonetheless, Beijing is now expected to reduce its intervention in the forex markets, given the IMF’s recent decision to include the renminbi in the fund’s Special Drawing Rights basket, Lau said.
- Contact us at [email protected]