Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Breaking News

Coinbase, Consumer Prices, Chip Stocks: 3 Things to Watch

China Lets Traders Push Yuan Toward Best Quarter on Record

ForexSep 16, 2020 12:27AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. China Lets Traders Push Yuan Toward Best Quarter on Record

(Bloomberg) -- China’s policy makers are in no rush to rein in a rapid advance in the yuan, as traders push the currency toward its largest quarterly rally on record.

The yuan has strengthened 4.2% since the end of June to 6.772 per dollar, set for the biggest ever quarterly gain in Bloomberg data going back to 1981. The currency is the best performer in Asia in the third quarter, with the buying momentum being close to the strongest since January.

The yuan is being supported by a slump in the dollar, while Chinese media has been attributing the gains to the nation’s economic recovery.

The central bank has also helped by not standing in its way, which for some in the market is an incentive for the currency to push higher. Beijing’s daily fixings have tracked the spot rate, and officials have not expressed any concern over the currency’s strength.

“There is scope for further yuan gains before the authorities start to become concerned about excessive strength,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd., adding that a lack of pushback from Beijing has encouraged him to become more bullish. “It is very likely for the yuan to hit 6.7 in the near term.”

Beijing’s apparent blessing of the rally is a far cry from a few years ago, when the People’s Bank of China sought to rein in gains for fears that it would hurt exporters. What’s different now is the country has changed its strategy for boosting growth. It’s now more focused on cheapening imports and bolstering domestic consumption, and a stronger currency could help achieve that.

This doesn’t mean the PBOC will allow the yuan to gain too fast. One indicator traders follow is the Bloomberg CFETS RMB Index Tracker, which measures the currency against 24 peers. While it shows the yuan has climbed 2.2% this quarter, it is still well off this year’s peak in March.

The yuan is also close to the weakest level in six years versus the euro, the currency of a major trade partner. That suggests there’s room for further gains.

Beijing will likely slow the appreciation by issuing weaker fixings and relaxing capital controls if the yuan basket rises another 2%, Goh said.

©2020 Bloomberg L.P.

China Lets Traders Push Yuan Toward Best Quarter on Record
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Kaveh Sun
Kaveh Sun Sep 16, 2020 1:59AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
In the past, BoC intervened. But it looks like they backup now because Trump
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email