UBS economist Tao Wang declares the ‘end of an era’ for the Chinese yuan.Basically, the period of steady, predictable increases in the Chinese currency are coming to an end.
While there have been fits and starts in the movement of the yuan before, the basic reason is that there just isn’t much more that realistically needs to get done to get China into balance. Its trade deficit is not ridiculously huge anymore, and external demand is not that great, meaning that if anything their inclination would be to do the opposite (more currency devaluation).
UBS expects another 2-3% increase in the value of the yuan this year, in part due to political reasons associated with the election in the US. But not long after that, it could start trading in either direction.