The future performance of the Renminbi is hard to forecast at the moment, as central banks worldwide make adjustments to their monetary policies. Chen Tong reports.

The weakening of the yuan started in the first quarter of this year when it was at 6.3 to the US dollar. One major factor behind the decline has been the narrowing spread between the sovereign bond yields of China and the United States. The current spread stands at only about 70 basis points, and with that continuing to narrow, more downward pressure is expected on the yuan.

DENG ZHIJIAN, INVESTMENT STRATEGIST DBS CHINA "The gap between the bond yield between these countries is getting narrow. The cash flow, the US dollar will out of the country and heading to US. The US dollar will be stronger than before, appreciating, but the CNY will depreciating in the next two years. This end of the year, I think (it) will be heading to 7, but I don't think it will be over 7 but between 6.9 and 7."

Other factors putting pressure on the Renminbi include the general market expectation that the US Federal Reserve will raise its interest rates in September, and the People's Bank of China's frequent liquidity injections into the money market. But as other central banks continue adjusting their monetary policies, other analysts are saying that the dollar may also be facing some downward pressure which could act to slow the yuan's depreciation.

JIMMY ZHU, CHIEF STRATEGIST FULLERTON MARKETS "We expect the BOJ will probably tweak its monetary policies, sometime between Sep and Oct. The ECB will probably raise interest rates as third or fourth quarter next year. That will probably slow the pace of dollar appreciation. If we talk about dollar yuan, we think the current back job of Fed and PBOC policy is unlikely to appreciate the Chinese currency. So the action of BOJ and ECB we think at the end of the year will slow the yuan depreciation."

While the Renminbi's recent weakening may seem dramatic, a report last week from the International Monetary Fund said the Renminbi's current value is in line with the Chinese economy's basic fundamentals.