The yuan nearly reached the level it held on January 20, its strongest in the year-to-date
by Uwe Parpart
The offshore yuan (CNH) did the PBoC one better. It traded in the 6.8698 – 6.8876 range during the HK trading day and at 4pm HK time nearly reached the level it touched on January 20 – its strongest in the year-to-date – of 6.8672.
As I wrote earlier this week, 6.86 is the next target level in the inexorable rise of the yuan since its May 27 weak point of 7.1763. That would come out to a very substantial 4.7% gain against the greenback and rival the yuan rises of November 2019 – January 2020, November 2018 – February 2019 and December 2017 – February 2018, all triggered by US – China trade deal optimism.
Things are different this time around.
The resumption of some form of trade chatter between the US and China since last weekend when US President Trump put on one of his inimitable macho acts and said he’d called the whole thing off, may have encouraged the yuan over the past few days.
But on the whole, that’s not what’s been driving the yuan’s rise.
China defeated the coronavirus and got its economy back on track. The US has failed miserably on both counts and loaded itself with massive amounts of new debt – some $7 trillion all told – just to keep afloat.
Those are the critical US dollar negative factors.
Note that the dollar declined on the dollar index (DXY) from 102.8170 in March 2020 to a low of 92.2710 on August 18 and was trading in a range of 92.7850 – 93.1370 in Hong Kong today……more here
Click here for reuse options!