With Chinese COVID Restrictions Being Lifted, Yuan Has Jumped Past 7 Per DollarDecember 3, 2022
On Monday, investors were in shock to see the trading value of the yuan experiencing a significant surge against the dollar.
The value of the Chinese yuan rose significantly higher compared to the dollar price on Monday. The value of the Chinese yuan crossed the 7-per-USD level, which was a sign of a good start for the yuan.
This is the highest point the Chinese yuan has hit against the dollar since mid-September. The Chinese yuan investors are glad that they are seeing a surge in the fiat’s trading price after a while.
Strict COVID-19 Curbs are Easing
The value of the Chinese yuan started to weaken against the dollar because of the worsening COVID-19 situation in China.
The country has been using all possible resources to deal with the situation and is still trying to bring COVID-19 cases under control.
The investment sector in China had been badly impacted by the restrictions the Chinese government had to introduce due to the COVID-19 outbreak.
The country had to continue with its lockdowns and tighten the safety measures against the coronavirus. The business districts in all major cities in China had to be locked out because of COVID-19.
Finally, the country has decided to ease up on the strictness of the safety measures. The country is focused on pumping up its economy, stock markets, and exchange rate.
The country is very concerned about its trade because the export figure has been declining at a fast rate.
It was only a matter of time, the country would end up taking a major hit to the economy if the lockdowns were not eased.
With the ease introduced by the government, things are coming back to normal. Right after the announcement from the Chinese government, a huge positive change has been witnessed in the trading sector.
With the Chinese business sector getting back on its feet and the trades coming back to normal, the Chinese yuan is definitely going to rebound.
US Feds have Helped the Yuan
The Chinese government’s decision is not the only reason the yuan has experienced a surge. It is also the input of the US Feds that has helped pump the yuan’s price.
The US Feds recently confirmed to the investors that the interest rates will not be increased with the same aggression as before.
With the interest rates weakening, the investors have a hope that the dollar price would plummet. As China is the second-largest economy in the entire world, its currency is, therefore, gaining the most from the Feds.
As the Feds announced they will start easing on the interest rates, the value of the dollar plunged. In the latest trading session, the dollar index has fallen to a five-month low.
A Bumpy Ride for the Yuan
It is now clear that the value of the dollar may continue to plummet in the future. However, analysts are predicting that the Chinese economy may take a while to fully recover.
Until that happens, the value of the yuan may remain volatile. Therefore, it would become a bumpy ride for investors who are constantly tracking the value of the Chinese currency for investment purposes.
Coronavirus is Still a Threat
Despite the safety measures and constant work by the Chinese government and the medical authorities in the country, COVID is still a big threat to civilians.
As long as the threats linger, the Chinese economy will continue living in a fear of a great plunge. This is the reason why investors will never be able to go all out making investments.
The government of China needs to provide assurances and get rid of the COVID-19 matter once and for all.
Chinese Yuan’s Performance
The value of the onshore yuan rose by 1.4% against the dollar, closing up to 6.9507. The yuan’s overall surge in the past week was 1.6%, which was the highest jump it recorded since 2005.