Goldman Sachs: Further Yuan depreciation carries risk that capital outflows re-escalate

Analysts at Goldman Sachs noted in their latest report that the Chinese currency is likely to continue its downward spiral against the US dollar, which could lead to huge losses for foreign investors in Chinese financial markets.

Key Quotes:

“The fundamental dilemma of China’s currency regime is that, in an environment of a rising dollar, keeping the CFETS basket stable requires $/CNY to move higher meaningfully, which carries the risk that capital outflows re-escalate, our base case is one where the $/CNY fix continues to grind higher, driven by domestic pressures and in the context of a stronger dollar.”