The end of a temporary sweet spot that China enjoyed with its exchange rate -- strength versus the dollar and weakness against trading partners -- will spur renewed capital outflows, Goldman Sachs/Gao Hua Securities Co. said.
With the U.S. poised to raise interest rates and pressure building on China to ease monetary policy, cash outflows will accelerate, said Song Yu, chief China economist for Goldman Sachs/Gao Hua. The yuan is down 1.6 percent this month against the greenback, with policy makers setting the currency’s daily fixing at the weakest level in five years on Monday, and up 0.2 percent against a basket of peers.
