Indifference to the yuan’s slide
October 10, 2017 Category Finance, Weekly
As recently as the spring of last year, a nearly 2% decline in China’s currency in a week would have sent global markets into a tailspin. But 18 months later, the muted response on the part of international investors a 1.9% decline in the yuan versus the dollar – the sharpest weekly drop since the surprise devaluation of China’s currency on August 11, 2015 which triggered a dramatic deterioration in sentiment – is one of the clearest signs of the persistent bullishness in markets in the face of mounting financial and geo-political risks.
While the onshore yuan hit a 21-month high against the greenback as recently as September 8, partly due to this year’s plunge in the dollar, the recent decision by China’s central bank to scrap two trading curbs designed to deter speculation against the currency reveal the extent to which sentiment towards China itself has improved and the degree to which global financial conditions have eased, in part because of the steep decline in the dollar.
In the same week in which the yuan suffered its sharpest fall in more than two years, the Shanghai Composite Index barely budged, having risen 9% since the end of May, in stark contrast to its 24% decline in the six weeks following the August 2015 devaluation. Beijing’s success in stemming capital outflows and stabilizing the yuan – China’s capital flow even turned positive in the first half of this year while the yuan is still up more than 4% versus the dollar since the start of this year – has been helped by a confluence of favorable external factors that have pushed the dollar index down nearly 10% to its lowest level since April 2016, the South China Morning Post reports.
- KURT VANDEPUTTE (UMICORE) APPOINTED CHAIRMAN OF THE BOARD OF THE FLANDERS-CHINA CHAMBER OF COMMERCE (FCCC)
- Webinar: “Knowing Your Chinese Partner” – May 26, 2021, 10 am – 12 am
- EMA starts rolling review of CoronaVac, WHO approves Sinopharm vaccine for emergency use
- The Global Times warns not to politicize the Comprehensive Agreement on Investment (CAI)
- Hainan to become biggest duty-free market in the world