"The capital controls will hurt the yuan`s status and reputation," said Shen Jianguang, chief economist with Mizuho Securities Asia.
China has changed its long-standing rhetoric on its yuan policy, signalling Beijing may alter its course on exchange rates this year under pressure from US Federal Reserve rate rises and US President Donald Trump`s threats of a trade war.
"In the past two years, the status of the yuan as an international settlement and valuation currency, as well as the scale of the yuan`s fund pool offshore, have fallen.
The Chinese currency is losing its appeal for investors, even though it had obtained a nominal reserve currency status from the International Monetary Fund, thanks to the Chinese government`s tightened capital account controls and the prospects of weakening against the US dollar, analysts said.
"The renminbi exchange rate will be further liberalised, and the currency`s stable position in the global monetary system will be maintained," according to the government work report read out by Premier Li Keqiang at the National People`s Congress on Sunday.
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