The weakening of the yuan and the strengthening of the US dollar evidence of Chinese economy slowdown. However, according to experts, the country's central bank deliberately weakens its currency that would support economic growth.
According to Paul Meckel from HSBC, there were expectations that the yuan weaken to the dollar at the end of 2014. However, it happened earlier than expected. Devaluation accelerated due to launch of the QE program by the European Central Bank. Moreover, the yuan is quite sensitive to the euro fluctuations, as European countries are the main trading partners of China.
Since 2015 the yuan decreased by 1% to the US dollar. In the first quarter of this year, one of the negative factors will be the possible reduction of the balance of advance. A decrease in interest rates would reduce the attractiveness of the Chinese currency. That will follow the outflow of capital funds.
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