China’s Currency Falls when The Dollar Rises
The spike in the US dollar continues to resonate through global markets. on Thursday it crossed a crucial level vs. China’s currency.
The US dollar broke beyond 7 yuan threshold. This indicated that the US currency is experiencing broad-based momentum.
The US dollar was trading at 7.019 Chinese yuan in offshore trades. It gained 0.69% after reaching as high as 7.0173 yuan. It broke through the seven thresholds for the first time since July 2020, when the world economy was still reeling from the COVID-19 pandemic. The dollar saw a 0.48% gain and was worth 6.995 yuan in onshore trade.
PBOC constantly monitors yuan movements in mainland or onshore commerce. In the morning, the PBOC establishes a daily reference rate or fixing. During the day, the onshore yuan cannot move more than 2.5% above or below that fixing.
Concerns over China’s economy as it pursues sweeping lockdowns as part of its zero-COVID policy and tackles the fallout from a property boom have put pressure on the yuan. On the other hand, the dollar has been on a tear against all major currencies. Policymakers are committed to tame inflation, which remains well above target. Hence, the Fed should continue delivering big interest rate hikes next week.
Currencies
In currency terms, the dollar rose marginally versus the yen. In contrast, the Swiss franc rose to its highest level against the euro.
The dollar saw an increase of 0.119%. Meantime, the euro saw an increase of 0.15% to $0.9891. The Japanese yen was the last trading at 144.43 per dollar, down 0.18% against the US dollar. Meanwhile, Sterling GBP- was the last trading at $1.148, down 0.57% on the day.
Before the tentative agreement, fears of a railroad worker strike in the United States buoyed oil prices on Wednesday due to supply concerns. Furthermore, the International Energy Agency (IEA) predicted that oil demand growth would slow in the fourth quarter last week.
