Moody's: China's sustained capital outflows to challenge exchange rate stability

The US-based ratings agency, Moody’s Investors Service, came out with a latest report on China's exchange rate stability in wake of persistent capital outflows.

Key Points:

Likely persistence of capital outflows from China over the rest of this year

This could constrain monetary policy

May lead to a more activist fiscal policy, if the government's growth target is to be achieved

If capital outflows persist, domestic liquidity conditions are likely to tighten further

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