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China yuan 'could fall FURTHER against US dollar within the next SIX MONTHS'


Last week saw the Chinese tender end trading at its weakest close against the US dollar since January 2017 as fears of a slowdown in economic growth and an escalating trade war keep a tight grip on Asian markets.

The yuan is currently trading at around 6.94 against the US dollar, but Timothy Moe, co-head of Asia macro research, predicted this number could creep over 7 per dollar in the next half year.

He told CNBC: “It’s probably unlikely to happen before the end of the year because… 7 seems to be the short-term line in the sand.”

China stocks also plunged to an almost four-year low on Friday, before rebounding to record its best day in more than two and a half years on Monday.

The boost for Beijing came off the back of comments from President Xi Jinping pledging to protect private businesses.

The Communist leader said in a letter: “Any words and practices that negate and weaken the private economy are wrong.

“Supporting the development of private enterprises is the Party Central Committee’s consistent policy.”

International Monetary Fund Chief Economist Maurice Obstfeld said earlier this month he was not concerned about the Chinese government’s ability to defend its currency.

While some analysts have claimed fears surrounding the US-China trade war are being seen as “temporary” by central banks.

Chris Leung, China and Hong Kong economist at DBS Bank, said: “Some central banks see the uncertainty emanating from the trade war as temporary only, and remain positive over China’s long-term outlook.”

Latest figures show the economy in China grew less than anticipated, with a 6.5 percent increase year-on-year in the third quarter on 2018.

This is down on expectations for a 6.6 percent growth, according to analysts polled by Reuters, and is lower than than 6.7 percent year-over-year expansion in the previous quarter.

In more positive financial news for China, the nation is still on track to meet an official growth target this year of around 6.5 percent.

The economy grew 6.7 percent year-over-year in the first nine months of 2018, according to official statistics.

China has been bearing the brunt of an escalating trade war between Beijing and the US, further being heightened by policy tightening by the US Federal Reserve.

Washington has so far slapped $250bllion (£190.4billion) of tariffs on Chinese products.

This saw China retaliate with 10 percent tariffs on $60 billion (£46 billion) of US imports.

The tariffs stem from the Trump administration’s demands that China make sweeping changes to its intellectual property practices.

The US also wants Beijing to rein in high-technology industrial subsidies, open its markets to more foreign competition and take steps to cut a $375 billion (£283 billion) US goods trade surplus.



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