Yuan Internationalization and Expectations

yuan: To address the situation, China should properly manage investors expectations and capital flows in the short term, according to Global Times China. Over the long term, it should take concrete measures to reduce the country monetary stock and fundamentally stabilize the financial system, which is the foundation of the yuan internationalization. Against all popular explanations for the factors that have led to the depreciation of the yuan, I would argue that it is the impact of market expectations, which proves to be a self-fulfilling prophecy. The cornerstone of the yuan internationalization is financial stability rather than flexibility of exchange rate and free capital flow. These include expectations of the Fed rate hike in December, pressure from China weak foreign trade, massive capital outflows due to Chinese companies quickening pace of going out and the buildup of a property bubble which has prompted Chinese homebuyers to turn to overseas property markets. Currently, there are some popular explanations about what is contributing to the pressure on the yuan. (news.financializer.com). As reported in the news.