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The renminbi weakens

10 July 2012

The renminbi has tumbled in the past few days on the back of easing inflation pressures and the loosening of monetary policy in China. After showing some signs of strength in late June, buoyed largely by an improvement in global risk appetite, the renminbi has (yet again) proven volatile in the face of weaker economic growth in China. In our view, a weakening renminbi reflects concerns that policymakers will encourage (or, at least, accept) a softening in the currency as a part of their general campaign to promote growth.

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