Official data from China this week may reinforce the view that the economy is close to, if not at, a bottom, but the country's currency seems to be telling a different story.
The Chinese renminbi posted its first annual decline this year since 2005, dipping 1 percent to 6.3676 versus the U.S. dollar. The currency had gained nearly 22.3 percent from July 21, 2005 -- when the Chinese government abandoned the currency's 8.11 peg to the greenback and allowed it to trade within a designated band -- to the end of 2011.
Analysts say the falling yuan reflects a slowing economy , and further loosening of the exchange rate system will likely trigger further weakness, rather than strength, in the currency.
Boris Schlossberg, Managing Director of BK Asset Management in New York, says a "massive source of appreciation" for the currency in the near term is unlikely, as the Chinese economy is actually slowing "markedly."
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