Yuan jumps past 7 per dollar as China eases some COVID curbs

1 min


156
95 shares, 156 points

SHANGHAI (Reuters) – China’s yuan firmed past the closely watched 7-per-dollar level on Monday, hitting its strongest since mid-September, as Beijing eased some of its strict COVID-19 curbs, potentially attracting fresh foreign inflows.

The Chinese currency was also bolstered by expectations of slower U.S. interest rate hikes, which knocked the dollar index to near five-month lows.

But some warn that China’s road for economic recovery could be bumpy and that the yuan will remain volatile.

Potential “policy U-turns or worsening of the infections could be seen as opportunities to short” the currency, Maybank said in a note to clients.

The onshore yuan jumped roughly 1.4% to as high as 6.9507 on Monday morning, its strongest since Sept. 13, tracking the central bank’s firmer midpoint guidance.

Last week, the yuan jumped about 1.6%, its biggest weekly gain since 2005 amid expectations authorities will continue to loosen strict COVID curbs.

In the offshore market, the yuan gained 1.1% to a two-month high of 6.9438, after posting record weekly gains.

More cities, including financial hub Shanghai and Urumqi in the far west, announced an easing of curbs over the weekend as China tries to make its zero-COVID policy more targeted and less onerous after unprecedented protests against restrictions.

China’s benchmark CSI300 index jumped nearly 10% in November, as mainland stocks witnessed monthly net inflows exceeding 60 billion yuan ($8.55 billion) via the cross-border Stock Connect scheme.

Morgan Stanley on Sunday upgraded China’s equities to overweight, citing “multiple positive developments alongside a clear path set towards reopening.”

The Wall Street bank joined a slew of global institutions, including UBS and Goldman Sachs, in turning bullish toward China on expectations of an eventual reopening of the economy.

Standard Charted expects China’s real urban household consumption growth to accelerate to 7% in 2023, from 0.2% in 2022, forecasting China will remove most COVID restrictions by the second quarter of 2023.

Maybank also attributed the yuan’s strength to “the broader depreciation in the greenback.” The dollar index has slumped nearly 9% from its Sept. 28 peak.

($1 = 7.0190 Chinese yuan)

(Reporting by Shanghai newsroom; Editing by Sam Holmes)

Source: KFGO


Like it? Share with your friends!

156
95 shares, 156 points

What's Your Reaction?

Cute Cute
26
Cute
Fun Fun
18
Fun
Hate Hate
13
Hate
Confused Confused
2
Confused
Fail Fail
21
Fail
Geeky Geeky
16
Geeky
Love Love
8
Love
OMG OMG
2
OMG
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format