Yuan on track for biggest weekly decline since January

Rising depreciation pressures from a rising US dollar keep China’s yuan on track for biggest weekly decline since January. Yuan exchange rate in Shanghai retreated 0.8 percent this week as the USD climbed for two straight weeks amid rising odds of a Federal Reserve interest-rate increase.

Disappointing Chinese trade data also adds to downside pressure.  Exports plunged the most in seven months in September. The renewed export weakness is coinciding with increased measures by Chinese authorities to cool the property and corporate debt markets, which stoke expectations that policy-makers will allow further yuan depreciation.

The Securities Daily ran a story late-Thursday, as cited by MNI, China's central bank will likely keep reasonably loose monetary supply and won't tighten liquidity in the fourth quarter. China's supply side reform needs liquidity support, which can be done through a combination of short- and long-term tools, according to the commentary.

"China's currency will drop to 8.1 against the greenback by end-2018 as government efforts to cool the housing market, easier monetary policy and higher U.S. borrowing costs spur capital outflows," notes Deutsche Bank.