Why did yuan mark the largest weekly profit since late 2020?

2022-05-23 13:40:23 GMT (Economies.com)
Why did yuan mark the largest weekly profit since late 2020?

Yuan kept rising against dollar on Monday, marking three-week highs as the greenback slides against major rivals.

 

Yuan made the biggest weekly profit last week since November 2022, and we explain why.

 

USD fell 0.7% against yuan to 6.6840, a May 5 low, with the yuan marking a 1.5% profit last week, the largest such profit since late 2020.

 

Reasons include a weaker dollar, a stronger Chinese economic recovery, and short-covering after yuan plumbed two-year lows at 6.8375.

 

The Dollar

 

The dollar index fell 0.8% in the last session, marking three-week lows at 102.08 against major rivals, on active profit-taking off 20-year highs.

 

Disappointing US retails data dampened gains in the bonds market and flared fears of a recession.

 

Chinese Economy

 

China is starting to loosen up restrictions on movements in major cities as Covid 19 infections decline, while China's central bank took a bold move and cut interest rates to bolster economic activities.

 

Shanghai, a 25 million people city, is preparing to return to normal life by June 1.

 

Otherwise, the People's Bank of China cut five-year interest rates for loans by 15 basis points to 4.45%, the largest such decrease since 2019.

 

Estimates

 

Now analysts expect yuan to get back to 6.5 yuan per dollar if China delivered on lifting all restrictions soon.

 
 
 
  Symbol Last Change Chg.%
1.0427
-0.0154
1.4550%
1.2096
-0.0176
1.4311%
19.698
-1.669
7.811%
108.022
0.605
0.563%
111.50
2.47
2.27%
1799.775
-29.770
1.627%
 
 
US
 
Europe
 
Asia