Yuan Devaluation Forecasters Draw Strength From China Rate Cuts
- Commonwealth Bank of Australia, Rabobank see sharp weakening
- Offshore yuan, forward discounts reverse narrowing trend
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Yuan bears are predicting August’s devaluation will be followed by an even sharper depreciation in coming months. While the market isn’t buying that yet, it’s showing some nerves.
Commonwealth Bank of Australia and Rabobank Groep analysts are among those predicting China’s central bank will allow a rapid weakening of the yuan by July 2016 as it slashes benchmark interest rates to support the economy. The offshore yuan dropped 0.2 percent on both Thursday and Friday, while forwards contracts are flagging depreciation concerns even as the currency heads for a second month of gains in Shanghai.