Economists at TD Securities analyze the outlook for the yuan.
A slowdown in China’s recovery and widening rate differentials will increase pressure on the yuan
A slowdown in China’s recovery and widening interest rate differentials will increase pressure on the Yuan, and we think USD/CNY could return to last year’s highs around 7.30.
However, we expect the authorities to show their discomfort with the rate of depreciation through daily fixes, which will slow down the pace of USD/CNY growth.