A senior China CITIC Bank International official yesterday said the yuan will not drop below 7 against the US dollar before the end of this year.
"Although the two countries will suffer similar losses in the long run, the market expects the mainland to take a bigger hit in the short- to medium-term. The increased likelihood of further US rate hikes also accelerated yuan depreciation in the third quarter, further dampening Chinese corporations' cross-border investment and financing enthusiasm," chief economist at China CITIC Bank International Liao Qun said.
However, he pointed out that the government would not allow the yuan to depreciate sharply.
His comments came as the yuan rose while the US dollar weakened. As of the closing of trade, the onshore yuan stood at 6.9194, up 41 pips.
Qun also said China's economic development is facing its most difficult time in 10 years.
He said that mainland's economic growth has slowed down as it has entered a mature stage and it is facing trade frictions.
Therefore, the bank has lowered the economic growth forecast this year by 0.1 percentage point to 6.6 percent. It is expected to slow down to 6.3 percent next year.
As for the news that the United States is likely to target China as a currency manipulator, Liao Qun believes that the allegation is contrary to the facts as China has always been preventing the devaluation of the yuan.
However, he does not rule out that the United States will list China as a currency manipulator as an excuse for escalating the trade dispute.
Meanwhile, the CNCBI Cross-border Banking Demand Index in the fourth quarter this year fell 0.3 points further on a quarterly basis to 56 points, dragged down by Sino-US trade frictions. The Corporate Demand Index weakened by 0.4 points to 54.6 points.
In other news, US Treasury Secretary Steven Mnuchin warned China on Wednesday against engaging in currency devaluations as the two countries wage a trade war, in comments published in the Financial Times.
"As we look at trade issues, there is no question that we want to make sure China is not doing competitive devaluations," Mnuchin told the newspaper.