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CCB International’s Lam Says Yuan to Weaken on Interest-Rate Cut

Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., comments on China’s decision to cut interest rates for the first time since 2008.

“The yuan will trade weaker against the dollar in a month’s time as investors take today’s interest rate cut as a signal that upcoming economic data will be bad. They are also expecting more rate cuts to come.

‘‘I expect the yuan to appreciate 1 percent at most this year, and the worst case is no appreciation.

‘‘China is likely to reduce interest rates one more time and have another required-reserves ratio cut this year. Either of them should happen within two months.

‘‘Yuan gains will resume momentum when investors see China’s economy is growing again with stimulus taking effect.’’

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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