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Yuan weak today but strong tomorrow

The yuan’s sudden decline is knocking the world of foreign exchange off balance. The big question is – is it just a blip in China’s post-2020 appreciation cycle or a new trend signaling a steady depreciation?

The odds are, it’s a blip. Even so, the near-term risks to Beijing’s exchange rate trajectory are shifting toward the downside as 2022 unfolds.

And in purely econometric terms, the yuan’s 3% decline this month makes sense.