THE yuan finished the year of 2015 with a record yearly loss of 4.7 percent after volatile trading in last five months.

    A big question in global currency trade for 2016 is how much further the yuan might depreciate. Still, the currency has posted comparatively smaller losses against the dollar than other global currencies.

    “We believe yuan depreciation is likely to continue through 2016,” said Craig Chan, foreign exchange strategist at Nomura.

    Some traders forecast that it could slip as far as 6.80 to the dollar at the end of 2016, based on the slowing growth of the world’s second-largest economy and divergence in the value of the yuan onshore and offshore.

    “We think China and the United States will continue their [different] tone in monetary policy in 2016, which would boost the dollar and exert downward pressure on the yuan,” said a dealer at an Asian bank in Shanghai.

    Prior to Thursday’s market opening, the People’s Bank of China set the midpoint rate at 6.4936 per dollar, its weakest level since May 2011 and 0.1 percent weaker than the previous fix of 6.4895.

    The spot market Thursday, the last day of 2015, closed at 6.4936 per dollar, 0.05 percent weaker than the previous close.

    “The yuan moved barely today,” said a dealer at a foreign bank in Shanghai on Thursday. “But it is still a volatile year.”

    The Chinese currency shed 1.5 percent just for December and saw its biggest yearly loss since 1994, when China established its foreign exchange market.

    The International Monetary Fund (IMF) announced Nov. 30 that it decided to admit the yuan into its Special Drawing Rights (SDRs) basket, an important milestone for the Chinese currency’s integration into global finances.

    After the announcement, the onshore yuan lost 1.35 percent against the dollar in a 10-day consecutive depreciation, the longest weakening streak on record. The People’s Bank of China permitted the yuan’s fall, making the yuan to be more internationalized and market oriented.

    The People’s Bank of China devalued its yuan midpoint guidance rate Aug. 11 by nearly 2 percent, which it called a reform of basing the midpoint on the previous day’s closing price. But the subsequent expectations of steep depreciation forced the central bank to take unprecedented steps to support the yuan, along with rescuing measures to stabilize the nation’s stock market, partly hit by the yuan’s weakness.

    From January to July, before the landmark devaluation, the yuan had stayed around 6.2 per dollar. (SD-Agencies)