Yuan is expected to extend gains, with accompanying consequences

06/2/2013 | Xinhuanet.com (China)

Substantial near-term gains for the yuan are likely, with the Chinese currency possibly reaching 6.1 to the U.S. dollar, according to one currency analyst at DBS Bank. However, analysts see challenges for Chinese companies in the new currency environment. "While the benefits of direct convertibility between the renminbi and other currencies are obvious, including cutting the costs of exchange and reducing the risks brought by the fluctuation of the U.S. dollar, it can also bring some risks to companies and regions in China whose growth is driven by foreign trade," said Liu Yang, a foreign-exchange analyst with Shanghai Gaofu Consultancy.

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