Strategists are back to debating the direction of China's currency after the central bank guided the yuan lower on Monday, having let it rise to its highest level of the year against the dollar on Friday.
Jan Lambregts, Rabobank's global head of financial markets research, told CNBC on Monday that he's anticipating a ten to fifteen percent depreciation over the next twelve months.
The world's second-largest economy is facing an unprecedented set of economic and policy challenges and in order to overcome them, the government will have to start making more bold moves in the currency, he explained.
"We feel that [yuan depreciation] is a relatively easy step for China compared to the hard, structural reforms they need to do."
Beijing is expected play down the significance of currency weakness but the country's rising economic challenges, including a long-awaited restructuring of state-owned enterprises, leave policymakers with little choice, he continued.
Following a volatile start to the year, the yuan (CNY) hit a 2016 high last week following dovish remarks from the U.S. Federal Reserve but recent fixings by the People's Bank of China (PBOC) revived speculation that authorities may prefer a weaker currency.