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Yuan to stabilize in the short term

Reporter: Michelle Van den Bergh 丨 CCTV.com

11-29-2016 16:21 BJT

China set a stronger reference rate for the RMB for a second straight day on Tuesday after China’s central bank’s deputy governor said on Sunday that the yuan will remain stable.

China’s yuan has stabilized this week against the greenback after hitting an 8 and a half year low last week. Its decline in value has accelerated with a sudden increase in expectations that the Fed will raise interest rates.

Experts say that it will stabilize within a reasonable range once the rate hike threat is out of the way and the market will rebalance itself.

People’s Bank of China Vice Governor Yigang has said that the yuan showed characteristics of a strong currency, it has fallen less than other currencies against the dollar. Emmanuel Daniel, chairman of the Asian Banker, says the yuan might play a security role for the developing countries.

China is said to be contemplating more capital restrictions to prevent the yuan from tumbling. Analysts predict the currency might strenghten in the short term but continue to depreciate in the medium term as the greenback’s rally continues.

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