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.