According to the rating agency Moody’s, the Chinese Yuan is due to experience greater-than-normal volatility as China’s current account evolves.
Key highlights
Statements from Moody’s suggest that the Yuan’s current depreciation won’t affect China’s credit profile for the time being.
As devaluation continues, Yuan volatility expected to rise.
China’s foreign currency reserves should provide a sufficient buffer to temper any excess volatility seen in the Yuan.
Over the long term, volatility could be seen spiking as China shifts from its current account to a structural deficit.
The Chinese authorities are likely to continue developing policy tools designed specifically to adjust to a more volatile currency.
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