Yuan may see annual decline, face more pressure to depreciate   

人民币岁末突现连续贬值 分析称明年贬值压力更大

(ECNS) -- The Chinese currency renminbi, or the yuan, may face more pressure to depreciate in 2015, as the exchange rate of the yuan against the US dollar continued to plunge during the final trading days of 2014.

The yuan hit a low of 6.2325 per US dollar on December 24, its weakest level since late June.

The value of the yuan against the greenback fell five days in a row. Compared to the start of 2014, the yuan has dropped 0.43 percent this year.

Lu Zhengwei, chief economist at the Industrial Bank, said the Chinese currency has shrugged off the old model of one-sided appreciation, and has now entered into the "new normal" of two-sided fluctuations.

The key reason behind the weakening yuan is the US dollar getting stronger. The dollar hovered at its highest in nearly nine years against a group of major currencies on Wednesday, following stunningly strong US economic growth.

With only days before the start of the new year, traders said it is highly possible that the yuan would experience an overall loss for the whole of 2014. Expectations of short-term depreciation are now strong.

This would be the first annual decline since China started reforming its exchange rate mechanism in 2010. Appreciation quickened in 2013, and its value rose three percent, compared with 0.25 percent in 2012.

The value of the yuan saw ups and downs in 2014. Since February, the yuan rate continued to drop against US dollar, hitting 6.25. In June, it rose again, before weakening once more.

JP Morgan Chief China Economist Zhu Haibin said that China's exchange rate policy would be significantly affected by differing currency policies in the United States and Europe.

Yu Yongding, a former member of the monetary policy committee of the People's Bank of China, also said that uncertainties may increase next year, and that there would be more fluctuations.