The People’s Bank of China will hit the brakes on depreciation to avoid sparking global volatility and exacerbating capital outflows, according to Svenska Handelsbanken, the currency’s top forecaster, Bloomberg reports. The case for an end to yuan weakness is supported by its impending entry into the International Monetary Fund’s reserves basket in October as well as a dovish Federal Reserve spurring dollar declines, says JPMorgan Asset Management. The yuan has posted Asia’s biggest decline this year on speculation policy makers were guiding depreciation against both the greenback and a trade-weighted gauge as they looked to boost exports and revive economic expansion. Things may finally be turning around, with data from GDP to retail sales spurring optimism that growth will steady and that the monetary authority will refrain from aggressive easing.
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