By Winni Zhou
SHANGHAI, Oct 12 (Reuters) – China’s move to cool a rising yuan stands little chance of stopping further gains, international banks say, as the strength of the world’s number two economy and a near-record yield advantage drive big and steady inflows.
Over the weekend, the People’s Bank of China (PBOC) scrapped a requirement for banks to hold a reserve of yuan forward contracts, removing a guard against depreciation and sending the currency down 1% for its steepest drop since March.
Yet an identical move three years ago ultimately proved ineffective, and investors say this time the conditions are even more likely to buoy the yuan, perhaps as far as 6.5 per dollar.
“In all previous instances, the impact of the regulatory change was temporary,” said Eugenia Victorino, head of Asia strategy at Swedish bank SEB in Singapore.
“We continue to expect the yuan to remain on