The yuan may weaken following China’s decision to widen the currency’s trading band for the first time since 2007, according to Benoit Anne, the London-based head of emerging markets strategy at Societe Generale SA.
He spoke in a phone interview today.
On a weaker currency:
“The markets may take this move as a disguised way of easing through a weaker currency. A widening of the band is not a guarantee that the yuan is going to go stronger. Right now I think the balance of risks is that the currency will swing the other way.”
On market impact:
“If the market interprets this as an accommodative move, ultimately that’s positive for risky assets. If you allow your currency to weaken a bit, this is positive for the economy. It’s probably good for equities and commodities and emerging-market assets.”