Yuan Faces Stronger Depreciation in H2: News

The Chinese yuan will face depreciation pressure in the second half as the U.S. dollar may rebound on accelerated recovery and tightening of monetary policy, said the PBOC-run newspaper Financial News citing analysts. The Federal Reserve is expected to release a signal of QE reduction in Q3 amid increased inflation, and China will not follow up any interest rate hikes quickly, possibly leading to further narrowed spread over the two countries' interest rates, or even a reversed spread that may push the dollar stronger, the newspaper reported the analysts as saying. The U.S. and other developed countries are expected to basically achieve herd immunity in Q3, and the growth gap may narrow if the Chinese economy slows down in H2 while the U.S. recovery speeds up, the newspaper said.