Yuan will slide by 5 per cent at most in 2017, says top economist
The current US dollar strengthening is ‘fragile’ while continued yuan devaluation ‘impossible’, says former PBOC official Li Daokui
The Chinese central bank will ensure the yuan falls no more than 5 per cent next year, according to Li Daokui, a professor of economics at Tsinghua University and a former central bank adviser.
Speaking at the Caijing annual forum in Beijing on Thursday, Li said he does not expect the currency to drop any more steeply than it has been recently.
“The People’s Bank of China has the ability to manage market expectations, and the yuan’s depreciation against the US dollar will be capped at 5, or 3 per cent for the next year,” said Li, who is director of the university’s Centre for China in the World Economy.
He was using an exchange rate of 6.8 per US dollar – a level regarded in the market as psychologically important – as a benchmark, which means the biggest depreciation he expects would be 7.14 by the end of next year.
The US dollar has been strengthening in the wake of Donald Trump’s shock victory in the presidential election, which has provoked pro-growth policy expectations.