Offshore Yuan Drops as PBOC Cuts Fix, Pimco Warns of 7% Decline
- Asset manager says yuan is the biggest risk to world markets
- Pressure to build when Fed raises interest rates: Scotiabank
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The offshore yuan dropped to a one-week low after China’s central bank weakened its daily fixing and Pacific Investment Management Co. said it sees further depreciation for the currency.
The People’s Bank of China lowered its reference rate by 0.33 percent, the most since Jan. 7, following an overnight advance in the dollar on comments from Federal Reserve officials on the possibility of an interest-rate increase as soon as April. The yuan, “by far the single biggest risk for the global economy and markets this year,” is expected to depreciate 7 percent against the dollar over the next year, according to a Pimco report Wednesday based on the firm’s quarterly cyclical economic forum.