FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, suggests that a weaker currency would fit with China’s bias towards looser monetary policy which was reinforced by the further deceleration in China’s economy confirmed by the Dec data. Key Quotes “On our estimate of the trade-weighted yuan (ATWICNY on Bloomberg), the currency has been roughly range-bound since Q2 2015 and even now is still up 2.2% y/y. Our baseline scenario for 2016 has been for the yuan to depreciate modestly (say 3-4%) against USD but see limited change in TWI terms. Risks to this are skewed to more substantial depreciation, with growth sluggish and inflation low. Shorter term, it is sensible to expect USD/CNY fixings to hover around 6.56 until further notice. But any given day holds the risk of a relatively sharp move, with a notably higher USD/CNY the most likely outcome. Hence the risks for the likes of AUD, NZD and Asian currencies around the daily CNY fixings are skewed firmly to the down side.” For more information, read our latest forex news.