Ex-PBOC adviser Li: Yuan fall on cards, more capital outflows a risk - RTRS

Former People's Bank of China (PBOC) adviser Li Daokui told the Reuters Global Markets Forum on the sidelines of the World Economic Forum (WEF) late-Wednesday, the yuan could fall by 5% in 2017, which could expose risks for greater capital outflows.

Key Quotes:

“I have a benchmark of five percent depreciation, which will be the 7.35 yuan to the dollar. Anything bigger than five percent will trigger more capital outflows.”

“Five percent is the spread between a Chinese low-risk rate and that of the U.S. dollar.”

“So far, 80 percent of capital outflow is by corporates. Thus, I expect the PBOC to sharpen its teeth on fake imports, which account for 60 percent of corporate-initiated capital outflow.”

“I do not expect a lot of measures on household exchange for the USD. “