PBOC seen quitting yuan support by year end as reserves shrink

Beijing

CHINA'S central bank will have to step back from supporting the yuan by early December and allow the currency to decline, given the current strain on foreign-exchange reserves, according to Rabobank Group.

The nation has to keep at least US$2.7 trillion in hand to avoid any potential shortfalls, considering it needs US$1 trillion to pay for six months of goods imports and US$1.7 trillion to service external debt, Michael Every, head of financial markets research at Rabobank in Hong Kong, wrote in a note on Tuesday. The stockpile will shrink by US$40 billion a month for the rest of 2015, partly due to efforts to prop up the yuan, according to a Bloomberg survey conducted in August.