PBOC Expected To Widen Yuan Trading Band In Q2

China’s central bank is forecast to double the yuan’s trading band in the coming quarter as policy makers loosen exchange-rate controls to promote greater usage of the currency in global trade and finance.

Of 29 analysts surveyed by Bloomberg News in the past week, 20 predicted a move in the April-June period, while four said they expect a revision in March. There were four forecasts for a change in the third quarter and one for the final three months of the year. The People’s Bank of China allows the yuan to diverge a maximum 1 percent from its daily reference rate and 21 analysts in the survey saw the limit climbing to 2 percent in the next adjustment of the trading band.

An expansion would lend weight to China’s pledge to allow its currency to trade more freely and address U.S. criticism that the exchange rate is kept artificially weak to protect Chinese exports. The PBOC included an “orderly” broadening of the yuan’s band among its 2014 policy goals on Feb. 19, while lawmakers will hold annual meetings from next week to decide on major economic policies.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.