A weaker yuan?
China’s currency regime is slowly being liberalized towards a government goal of full convertibility early in the next decade. That could lead to a lot more volatility ahead in the value of the yuan against the dollar. Chinese authorities have battled hard in the past year to boost the currency, but aggressive measures to stem capital outflows may not be possible under a fully liberalized currency regime. Investors and speculators had been betting against the yuan over the past year due to worries over the health of China’s economy given rising bad debt levels and other problems. A liberalized currency regime will be a lot more volatile and unpredictable, potentially leading to a lower-valued yuan after recent years of strengthening value in the currency have helped drive up demand for imported seafood.
