Economics
China Ditches Deleveraging, Posing Yuan Hit, Citigroup Says
- Officials are unlikely to view 7 as a key level, bank says
- HSBC also sees excessive emphasis on 7 yuan per dollar
This article is for subscribers only.
China’s moves to boost liquidity in an effort to safeguard economic growth are eroding the country’s yield premium over the U.S., putting “renewed pressure” on the yuan, according to Citigroup Inc.
“Going by its latest policy moves, China has likely halted or even abandoned its financial-deleveraging program” amid the trade war with the U.S., Liu Li-Gang, chief China economist at Citigroup in Hong Kong, wrote in a note. The People’s Bank of China has pumped 3.4 trillion yuan ($492 billion) into the banking system so far this year through regular open-market operations and cuts in lenders’ required reserve ratios, Citigroup estimates.