icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

Surging yuan is one of the world’s best performing currencies this year

Surging yuan is one of the world’s best performing currencies this year
Chinese currency trading outside the mainland surged to its highest level in 17 months on Tuesday, with the offshore yuan extending its rally to 6.7136 per US dollar. The yuan retreated slightly on Wednesday, trading at 6.7910.

The onshore yuan foreign exchange market remained closed for the ‘Golden Week’ national holiday, with trading set to resume on Friday.

“The yuan exchange rate is mainly determined by market supply and demand. The central bank will not use the yuan exchange rate as a tool to deal with disruptions from trade frictions,” the country’s central bank said in its second quarter monetary policy report.

As part of the phase one trade deal signed with the US in January, Beijing agreed not to devalue its currency to gain a competitive trade advantage.

Analysts say that investors are buying the yuan because China’s recovery is on track while the US dollar is expected to weaken. The yuan is one of the best performing currencies this year as China has racked up a massive trade surplus following the successful containment of the Covid-19 outbreak in the country.

Also on rt.com Move over dollar: Chinese yuan ends quarter with biggest gains in 12 years

According to Paul Mackel, head of emerging markets foreign exchange research at HSBC, the yuan is expected to rise slightly to 6.70 per dollar by the end of the year before appreciating further to 6.60 by the end of 2021. He also projects an acceleration in bond purchases by global investors.

Increased investor demand for the yuan to allow for the purchases of more Chinese stocks and bonds would also increase the currency’s value, analysts say.

“The yuan’s appeal is resonating with people who missed the initial bandwagon move and are playing ‘catch up’,” Stephen Innes, chief global markets strategist at investment firm AXI, told the South China Morning Post. “Regulators are also very much open to a stronger yuan because [China] wants to promote both its bond and equity markets.”

For more stories on economy & finance visit RT's business section

Dear readers and commenters,

We have implemented a new engine for our comment section. We hope the transition goes smoothly for all of you. Unfortunately, the comments made before the change have been lost due to a technical problem. We are working on restoring them, and hoping to see you fill up the comment section with new ones. You should still be able to log in to comment using your social-media profiles, but if you signed up under an RT profile before, you are invited to create a new profile with the new commenting system.

Sorry for the inconvenience, and looking forward to your future comments,

RT Team.