The Chinese renminbi is likely to further weaken to 6.9 against the US dollar by the end of the year, an HSBC currency analyst said.
Such an exchange rate represents a plunge of over 6 percent from the currency’s closing rate of 6.4732 onshore on Tuesday, the Hong Kong Economic Journal reports, citing Paul Mackel, head of emerging market currency research at HSBC Global Banking and Markets.
The expected decline will result from the decoupling in monetary policies between China and the United States with the latter pursuing its rate hike cycle, Mackel said.
The HSBC analyst, however, does not foresee another devaluation similar to the 2 percent cut in the renminbi exchange rate initiated by the Chinese central bank in August last year.
Mackel said the renminbi is turning into an anchor currency in Asia in view of its inclusion in the currencies the International Monetary Fund uses for its special drawing rights and the new basket of currencies that the renminbi uses as reference for its exchange rate.
Although the Chinese economy is slowing down and the renminbi is depreciating, the internationalization of the currency is sustaining, he added.
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