Economics
PBOC Seen Quitting Yuan Support by End-2015 as Reserves Shrink
- Rabobank sees yuan declining to 7 per dollar by year-end
- New curbs on forwards signal of stability, says analyst
Will China Spell More Trouble for Global Economies?
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China’s central bank will have to step back from supporting the yuan by early December and allow the currency to decline given the current strain on foreign-exchange reserves, according to Rabobank Group.
The nation has to keep at least $2.7 trillion in hand to avoid any potential shortfalls, considering it needs $1 trillion to pay for six months of goods imports and $1.7 trillion to service external debt, Michael Every, head of financial markets research at Rabobank in Hong Kong, wrote in a note Tuesday. The stockpile will shrink by $40 billion a month for the rest of 2015, partly due to efforts to prop up the yuan, according to a Bloomberg survey conducted in August.