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People's Daily Online>>China Business

Yuan appreciation to slow down

By Chen Yang (Global Times)

09:36, January 10, 2012

The Chinese currency will continue to appreciate but at a slower pace in 2012 compared with the previous year, amid shrinking trade surplus and expectations of a depreciation of the yuan in overseas markets, economists said Monday.

The yuan is expected to rise 3.5 percent against the US dollar this year, Ma Jun, chief economist for Greater China at Deutsche Bank AG, said at a media briefing in Beijing.

The yuan gained 4.7 percent against the US dollar last year, according to trading figures from the China Foreign Exchange Trade System.

The slower appreciation prediction is mainly based on China's narrowing trade surplus as well as expectations of a depreciation of the yuan in the non-deliverable forward market, Ma said.

China's trade surplus is expected to ease to $160 billion in 2011 from $183.1 billion in 2010, commerce minister Chen Deming said Thursday. The General Administration of Customs is due to publish trade figures for December today.

"The yuan will continue to appreciate until China reaches close to a balanced trade," Ma said, adding that the nation's trade surplus will continue to drop and may turn to deficit by 2016.

Liu Dongliang, a currency analyst at China Merchants Bank, expects that the yuan will continue to rise against the US dollar by 3 percent in the first half of this year, and then fluctuate both ways because of the slowing global economy.

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