Yuan isn’t following a depreciating path
China's major currency isn’t entering a depreciating path, though pressure will persist in the short term amid a strengthening greenback. That’s what the overseas edition of the People's Daily reported on Wednesday, citing experts.
The Communist Party's mouthpiece told that the Chinese currency is going to remain quite stable in the mid- to long-term, though with two-way volatility, while a depreciation trend is unlikely to take place.
Furthermore, the Yuan is backed by signs that the Chinese economy is already stabilizing. The Yuan would also be spurred by overseas investment following its inclusion in the currency basket, which determines the actual value of the International Monetary Fund's synthetic reserve currency Special Drawing Rights.
Positive American economic data has powered expectations of an interest rate lift by the Fed, thus applying pressure China’s currency. The global dollar index, which happens to be a gauge of the greenback’s value, has grasped 3.5% for the last two months.
The spot Yuan rate against the major American currency has dropped 1% so far this month.