China can't afford to let yuan slide quickly

New York

CHINA, like much of the world, is beefing up monetary stimulus to boost its economy. Yet, unlike its peers, it probably won't let its currency depreciate to help.

Sustained weakness in the yuan would make it more expensive to repay the US$1.1 trillion of debt the Bank for International Settlements estimates is owed by Chinese companies. As a result, China has to offset interest-rate cuts and other easing measures with steps to curb the yuan's 2.9 per cent slide from its peak about a year ago.

The quandary has made the yuan one of only two major currencies that forecasters surveyed by Bloomberg expect to strengthen versus the dollar this year, t…