Yuan Taps New Low Versus US Dollar as Investors React to Endorsement of Chinese President’s Third-Term Bid

The Chinese yuan’s offshore exchange rate against the U.S. dollar fell to a new all-time low of 7.33:1 just over a day after the conclusion of the Chinese Communist Party’s congress which gave President Xi Jinping the mandate to lead the country for the third time. Concerns over Xi’s unprecedented third term, as well as the reshuffle of his top team, are said to have sparked a sell-off of stocks that wiped billions from the wealth of China’s super rich.

Contenu

Chinese Yuan Has Depreciated by 7% Since Late August

The Chinese currency’s offshore exchange rate versus the U.S. dollar tapped a new all-time low of CN¥7.33:$1 when it fell by 1.5% some 24 hours after the conclusion of the Chinese Communist Party (CCP)’s congress. According to one rapport, the currency slipped because the CCP congress, which endorsed President Xi Jinping’s bid to lead the country for an unprecedented third term, did not ease investor concerns over the well-being of the world’s second-largest economy.

The offshore unit’s fall to its lowest level in more than a decade also came as the People’s Bank of China (PBOC) reportedly ended its long-running policy of fixing the yuan. en outre, the yuan lost ground versus the greenback on the onshore markets, dropping by 0.6% en octobre 24 to CN¥7.2648. Since late August 2022, when the exchange rate was around CN¥6.86 per dollar, the yuan has now depreciated by almost 7% versus the dollar.

Similar to other global currencies that have lost ground versus the U.S. dollar in 2022, the yuan has depreciated each time the U.S. Federal Reserve has hiked interest rates. Although the hikes are intended to tame the United States’ rising inflation rate, each round appears to make the dollar stronger. Par conséquent, many currencies including the pound, euro, yen, and the Swiss franc have since tapped record lows versus the greenback.

With analysts predicting another hike by Fed in November, there is an expectation that the yuan will depreciate further against the greenback. This sentiment is backed by a recent Bloomberg study which reportedly found that half of the 30 yuan traders interviewed thought the yuan would eventually drop to CN¥7.5 per dollar.

Stock Sell-off Erodes Wealth of China’s Richest

Entre-temps, another rapport said President Xi Jinping’s growing grip on the government, which was confirmed by the recently concluded congress, had helped to trigger a sell-off of stocks which saw China’s super rich lose around $9 milliard. Commenting on the billionaires’ losses, Kenny Wen, the head of investment strategy at KGI Asia, mentionné:

The slump today reflects the fragile investor sentiment. People are just trying to hold on to and look for more implications for the Chinese after the reshuffle.

According to the report, even before the October 24 sell-off, President Xi’s “Zero Covid” policies had already ensured 2022 would be the worst year for China’s wealthiest individuals.

Tags dans cette histoire

Quelles sont vos pensées sur cette histoire? Faites-nous savoir ce que vous pensez dans la section des commentaires ci-dessous.

Terence Zimwara

Terence Zimwara est un journaliste zimbabwéen primé, auteur et écrivain. Il a beaucoup écrit sur les problèmes économiques de certains pays africains ainsi que sur la façon dont les monnaies numériques peuvent fournir aux Africains une voie d'évasion..














Crédits image: Shutterstock, Pixabay, Wiki Commons

Avertissement: Cet article est à titre informatif seulement. Il ne s'agit pas d'une offre directe ou d'une sollicitation d'offre d'achat ou de vente, ou une recommandation ou une approbation de tout produit, prestations de service, ou des entreprises. Bitcoin-Tidings.com ne fournit pas d'investissement, impôt, légal, ou conseil comptable. Ni la société ni l'auteur ne sont responsables, directement ou indirectement, pour tout dommage ou perte causé ou prétendument causé par ou en relation avec l'utilisation ou la confiance accordée à tout contenu, biens ou services mentionnés dans cet article.

Lire avertissement