Yuan May Weaken on Fed Possible Tightening: News

The Chinese yuan may weaken against the dollar should the Federal Reserve tightens monetary policy to control inflation, or if the U.S. economy rebounds sharply, the PBOC-run Financial News said in a commentary. The Fed's withdrawal from easing may deflate asset bubbles, cause a sharp adjustment in U.S. asset prices, and trigger risk aversion in the global markets, it said. In turn, funds may flow back to the U.S. and lift the dollar index, the newspaper said. China's exports may also weaken as overseas supply capacity increases, further pressuring the yuan, the newspaper said. Yuan rose above 6.36 against the dollar last week, the highest in more than three years.