China Currency: Capital Outflow and Exchange

china currency: If just 13 million people, or about 1 percent of the total population, each use up their maximum exchange it would set off a rush of capital outflow, according to Global Times China. Although China currency is likely to remain stable in the long run based on its solid economic fundamentals, a large-scale capital outflow would bring short-term depreciation pressure to the yuan by impacting the foreign exchange market. Chinese residents are permitted to exchange up to 50,000 worth of yuan a year and some people are reportedly planning to use up their annual quota as soon as 2017 arrives. The government should not allow a sharp depreciation even though a weaker currency would be likely to bump up exports. Despite a string of recent economic indicators showing signs of improvement, confidence toward the domestic economy among the public and entrepreneurs has weakened, with continuous depreciation one of the main reasons. The depreciation of the yuan has become far more than just an economic phenomenon, it also shakes confidence in the Chinese economy. (news.financializer.com). As reported in the news.