![]() ![]() China buys a lot of commodities that are priced in dollars.īut there’s a pretty big downside if the currency appreciates too rapidly. It could also help to make imports cheaper and curb high inflation. The stronger the yuan, the more likely central banks are to keep a lot of the currency in reserve, promoting its global use. (In 2014, the offshore yuan touched nearly 6.01 against the dollar, its highest level since China conducted a landmark reevaluation of its currency in 2005.) Analysts at Goldman Sachs suggest the same could happen in the first half of 2022, for similar reasons. Liu expects the yuan to strengthen to 6.3 per dollar in the first few months of next year. The currency’s strong performance could continue into 2022, even as China’s economy struggles with factory inflation, a major slowdown in real estate, and an ongoing regulatory crackdown targeting its private sector. Costfoto/Barcroft Media/Getty ImagesĬhina's economy is getting a boost from exports but it's not in the clear yetīooming exports and hot money chasing comparatively juicy returns on Chinese government bonds are behind the surge “despite weaker economic growth,” according to Becky Liu, head of China macro strategy at Standard Chartered Bank. Headed into December, the yuan’s gain this year was “the best in the world,” said Marc Chandler, managing director for Bannockburn Global Forex, an Ohio-based capital markets trading firm.Ĭargo ships loading exhibits for the China International Import Expo are seen at the container terminal of Shanghai Yangshan Deep Water Port in Shanghai, East China, Oct. The offshore rate currently trades at 6.34 yuan per dollar, a level not seen since May 2018. Both versions are now at their highest levels against the dollar in three years or more. The yuan has risen between 2.4% and 2.8% this year against the greenback - depending on whether it trades in China or offshore. The yuan has also gained ground on the dollar. Based on that gauge - the CFETS RMB Index - it is just 0.26% short of its previous record high set in November 2015. The Chinese currency has soared more than 8% in 2021, according to an index that tracks the yuan’s performance against 24 other currencies. ![]() The yuan is also outperforming the US dollar this year even as the Fed prepares to hike interest rates. China is grappling with a slowing economy, yet its currency has rarely been stronger. ![]()
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