The yuan is poised to recover from declines that have made it Asia’s worst-performing currency as China seeks to prevent an exodus of capital that would threaten economic growth, according to the most accurate forecasters.
South Korea’s won is leading a drop in Asian currencies this year, after gaining the most in the second half of 2013, as tapering of U.S. stimulus drains funds from emerging-market assets and China’s economy slows.
Asian currencies had the best week since September 2012, led by Indonesia’s rupiah and India’s rupee, as signs the U.S. economic recovery is losing pace fueled speculation the Federal Reserve will slow further stimulus cuts.
China’s yuan tumbled by the most on record on speculation the central bank will widen the currency’s trading band, allowing greater volatility at a time when growth is slowing in the world’s second-largest economy.
China’s central bank is forecast to double the yuan’s trading band in the coming quarter as policy makers loosen exchange-rate controls to promote greater usage of the currency in global trade and finance.
International Monetary Fund Managing Director Christine Lagarde backed Group of 20 chair Australia’s proposal to put a number on economic growth targets as the gathering shakes off its crisis-response group origins.
The People’s Bank of China said the country does not benefit any more from increases in its foreign- currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.