POLL-Chinese yuan to rise modestly as economy finds footing
BEIJING, Sept 30 (Reuters) - China's yuan is likely to remain steady for the rest of this year amid investor caution as the world's second-largest economy finds its footing, before resuming a gradual appreciation to gain about 0.7 percent by next September, according to a Reuters poll.
The median forecasts in a poll of 16 analysts showed the yuan at 6.13 against the dollar at the end of October, 6.11 at the end of this year and at 6.08 by the end of September 2014. That compares with Monday's closing rate of 6.1220..
The previous poll in July had put 12-month gains at about 1 percent.
The yuan has risen about 1.8 percent so far this year, but the rate of appreciation has slowed in recent months due to caution over the economy's slowdown, the government's economic reform push and a belief that the central bank may be preparing for more currency reforms.
"For the medium term outlook for the yuan, we see a high probability of a slow appreciation, but there will be a visible rise in volatility and a notable increase in uncertainty," said Liu Dongliang, market analyst at China Merchants Bank.
The government has said the focus of its economic policy will be on transforming the economy into one driven by consumers, and it has said it will accept lower growth rates in order to push the reform.
Growth has indeed slowed, and though recent data has shown resilience in the economy, a strong rebound remains elusive. A private sector survey released on Monday showed that though China's manufacturing sector was expanding, weak domestic conditions were keeping a lid on that expansion.
Traders also believe the yuan's rise has slowed as the central bank intervened in the market in preparation for more reforms to the currency regime, though many believe such changes are not likely while other Asian currencies remain volatile.
Also keeping investors cautious is a key meeting of the ruling Communist Party in November, at which the leadership will lay out its roadmap for the economic transformation. The focus is expected to be on financial reforms, though the meeting may not touch on specifics on how the plans will be implemented .
Nevertheless, most analysts in the poll saw the yuan resuming its upward trend from about six months ahead, supported by a full recovery in economic fundamentals as well as policies to push the internationalisation of the yuan and the government's stated aim to free up the capital account.
(Reporting by Xiaoyi Shao, Coco Li, Michelle Chen and Jonathan Standing; Editing by Kim Coghill)