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.’’
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