Yuan May Face Steeper Correction if Dollar Rebounds: News

The yuan faces increased risks of a steeper correction in the short term as the Federal Reserve's recent policy direction sustains a dollar rebound, the Shanghai Securities News said citing analyst Li Liuyang with China Merchant Bank. A rise in the short-term rate of the dollar will have a significant impact on inflation and global capital flow, even as the yuan is supported by China's strong exports, Li was cited as saying. However, the yuan has been more stable trading against other major currencies as indicated by the weekly CFETS yuan index, the newspaper said. While the yuan may be pressured by the dollar in the near term, it will remain strong relative to other currencies given China's medium-to-high growth, surpluses in the international balance of payments, and its stable monetary policy, the newspaper said.