THE yuan is still expected to breach the key 7-per-dollar mark within six months as a dimming economic growth outlook is likely to push the central bank toward easier monetary policy this year, a Reuters poll found.

The number of analysts predicting the yuan will weaken to 7 per dollar or beyond at any time during the polling horizon increased in the latest poll from previous months and was the highest since a July 2017 survey.

The currency went through wild gyrations last year, with the spread between its high and low the widest in almost three decades.

However, median estimates in the wider Jan. 2-8 poll of more than 70 foreign exchange strategists showed the yuan will only weaken about 1.5 percent to 6.95 per dollar by end-June from about 6.85 Tuesday. It is then forecast to end the year at 6.89 per dollar.

Much will also depend on how long it takes China to stabilize its cooling economy and whether the United States and China end their trade tensions.

“Looking at the Chinese fundamentals, the economy is slowing and the central bank is easing monetary policy, with a lot of uncertainties over the next steps for the trade dispute between the United States and China,” said Erik Nelson, currency strategist at Wells Fargo.

“All these point to further weakness in the Chinese currency,” he added.

U.S. Commerce Secretary Wilbur Ross said Monday the United States and China could reach a trade deal that “we can live with” as dozens of officials from the world’s two largest economies held talks in a bid to end a trade dispute that roiled global markets last year.

Despite optimism around the talks in Beijing, some respondents warned that the U.S.-China relationship remained on shaky ground and that tension could flare up again soon.

“Until the outcome in the latest U.S.-China trade truce proves as substantial as the working level discussions, the risk remains for more tariffs on each other’s goods. If the United States reinstates the decision to lift the tariff rate on US$200 billion worth of China’s goods to 25 percent from 10 percent, the yuan could depreciate to 7.30 per dollar,” noted Philip Wee, currency strategist at DBS Bank.

But some respondents said the yuan would never break the 7-per-dollar threshold — not reached since the global financial crisis — on expectations that those who manage it will step in to defend it. (SD-Agencies)