Standard Chartered has cut its forecast for the yuan’s exchange rate against the US dollar to 6.75 by the end of the year from 6.67. And it expects the Chinese currency to weaken slightly further, to 6.78 by the end of 2017, below its previous forecast of 6.66. The bank’s revision, contained in a research note, comes after the yuan slumped 1.1 per cent in the previous eight days to a new six-year low as the greenback strengthened and Chinese exports tumbled. The yuan’s recent performance has hit the market particularly hard as there has been widespread speculation that the Chinese central bank would refrain from supporting the currency and allow depreciation to continue after its inclusion in the International Monetary Fund’s (IMF) Special Drawing Right (SDR) currency basket on October 1. The 6.70-6.80 level may hold for the yuan against the greenback Eddie Cheung, strategist, Standard Chartered The authorities have signalled that they no longer wish to defend the 6.70 level amid a broader advance of the US dollar, said Eddie Cheung, Asia FX strategist at Standard Chartered in Hong Kong, in his latest research note. “We expect Chinese authorities to be more reluctant to allow the 6.80 level to break as quickly, barring a further surprise jump in FX-market volatility,” said Cheung. “The 6.70-6.80 level may hold for the yuan against the greenback.” Despite the recent sharp decline, “we do not see this as the beginning of a new broader Chinese yuan depreciation trend, and we also believe fundamental arguments do not justify a broad-based depreciation of the yuan, as the authorities remain focused on containing macroeconomic risks and stemming capital outflows in the near term,” the report says. Onshore yuan rose 0.1 per cent to 6.74 against the US dollar in Shanghai and offshore was trading at 6.7446 in Hong Kong on Wednesday, ending the longest streak of declines this year. China’s yuan is not set on a depreciation path, but pressure will persist in the short term amid strength in the dollar, the overseas edition of the People’s Daily quoted experts as saying on Wednesday. It added that the yuan is supported by signs that China’s economy is stabilising. The yuan would also be bolstered by overseas investment following its inclusion in the currency basket that determines the value of the International Monetary Fund’s synthetic reserve currency, the Special Drawing Rights. The latest data appeared to indicate that the Chinese economy is stabilising, as GDP rose 6.7 per cent in the third quarter from a year earlier, the same growth rate as in the previous two quarters and in line with market expectations.