Yuan Erases Year’s Gains Against Dollar While PBOC Steps Aside
Bloomberg
2 hrs ago
China’s yuan is hurting after months of standing tall against the dollar.
In March, the currency gave up all its 2021 gains and then some. There are signs a short-term retreat may be starting as the drivers that lifted the yuan last year -- a quicker economic rebound from the pandemic and investors seeking yields -- get eroded, dimming the currency’s appeal.
Investors flooded into Chinese bond markets in 2020, boosting yuan usage and furthering China’s ambitions to internationalize its currency. But, a spike in Treasury yields is now cutting into the yuan’s yield premium, while an FTSE Russell index inclusion will now take place over a much longer period, slowing inflows. Throw in tensions between Beijing and Washington, and all these are speed-bumps for a currency that jumped almost 7% against the dollar last year.