Signs suggest China may tolerate yuan's weakening past 7 per dollar


By Emma Dai and Tian Chen
Bloomberg News
Wednesday, October 10, 2018

There are growing signs China's yuan may weaken past 7 per dollar, a key psychological level it hasn't breached in a decade.

The latest came in a China Securities Journal commentary Wednesday, where former central bank adviser Yu Yongding said authorities should refrain from market intervention and that tolerance of yuan weakness is needed for exchange-rate reform. The currency has already crossed the long-defended level of 6.9 against the dollar and is near its lowest since 2008.

"Yu's commentary is likely part of China's efforts to shape expectation and prepare for the yuan to breach 7 per dollar, so that the market wouldn't panic when it happens," said Xia Le, Hong Kong-based chief Asia economist at Banco Bilbao Vizcaya Argentaria SA. ...

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