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China Recovery, Fed Rate Cut To Support Yuan Rally

CHINA PRESS
MNI (Singapore)

The optimistic market sentiment on the accelerated restart of China's economy, boosted by the lifting of pandemic controls and relaxed real estate regulation, will provide favorable conditions for a yuan rally in 2023, Global Times reported citing Guan Tao, the global chief economist at BOC International (China).The yuan may come under rising pressure should the Dollar Index turn weak as the Federal Reserve starts to cut rates gradually later this year, Guan warned, suggesting China's central bank maintain the flexibility of the yuan to against external shocks. China's economic fundamentals will be more important to the trend of the yuan compared with the performance of the dollar and China-US interest rate differentials, and the three major indicators of growth, employment, and inflation will be references for accurately judging the strength of China's economic fundamentals, Guan pointed out.

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