Yuan May Depreciate in 2022: PBOC Newspaper

The Chinese yuan will face depreciation pressure in 2022 should the Federal Reserve hike rates significantly beyond expectations, and the rebound of the U.S. economy, while a likely reduction in export orders as other manufacturing bases recover also weakens yuan, the PBOC-run Financial News said in a commentary. The Fed is expected to hike rates as much as four times, which would push up U.S. Treasury yields and drive capital outflows from China, the newspaper said. Potential volatilities in the global financial markets due to Fed’s rate hikes or valuation correction can worsen investors’ expectations, with risks spilling over to China through capital flows from emerging economies and increasing yuan uncertainty, the newspaper said.