The renminbi—one of the world’s most tightly controlled currencies—may be hit by significant weakness, with predictions that Beijing will stand down from its traditional interventionist stance.
“We’re looking for about 5-10 percent depreciation over the next one year even though it might be stable over the next few months,” Adarsh Sinha, head of Asia Pacific G10 FX strategy at Bank of America Merril Lynch (BofAML) Global Research, told CNBC.
“History tells us that whenever China is facing any economic volatility, they always keep the currency as flat as a pancake. However, the tricky thing for China is that their capital account is gradually opening up, which makes it difficult for them to credibly stabilize the renminbi now.”
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