According to China analyst Charlene Chu of Autonomous Research, further devaluation of the Chinese Yuan going into 2016 is likely.
“In our view, a much larger move [in the yuan] than 2015’s 4.6% is likely over 2016-17, the size and timing of which will be driven by the degree of capital outflows and extent of deceleration in GDP growth,” Chu wrote.
So if the Yuan does further devalue, is the Chinese government doing it on purpose? If they are, they’re not admitting it publicly, having expressed a desire to maintain its stability just in December after spending $108 billion in propping it up.
Kyle Bass of Hayman Capital is a bit more sure of his bearish outlook on the Yuan.
“Given our views on credit contraction in Asia, and in China in particular, let’s say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there’s one thing that is going to happen: China is going to have to dramatically devalue its currency.”