In the past, depreciation was largely driven by a wide interest rate differential between the US dollar and the yuan, which prompted investors to favour dollar-denominated assets, said Miao Yanliang, the deputy head of the research department at the bank that is often dubbed “China’s Goldman Sachs”.
That pressure was unlikely to persist, Miao said in an interview, adding that he remained positive China can withstand the change after the latest US tariff announcement.
“The Fed has been cutting rates, and it’s going to cut further,” said Miao, adding that renewed investor interest could support capital inflows and help stabilise the yuan. “Global investors are coming back with hedge funds coming back first, and then next is going to be regional money [from] the Asian region.”
He added that onshore and offshore markets were needed if the yuan was to be used to settle trade and store value for investors.
