China’s Yuan Eases to 1-Week Low
Recent fluctuations in the price of the yuan have raised concerns about China’s economy. Global markets have closely tracked the value of the Chinese currency compared to other major currencies such as USD and GBP. Investors, economists and traders are closely monitoring the impact that the exchange rates of the Chinese yuan against the USD and GBP will have on the global economic situation. We examine the current state and reasons for its recent depreciation to a 1-week low.
The Yuan Price Movement: Unraveling the Yuan Price Movement
The People’s Bank of China (PBOC) took action as it set the midpoint rate of the Chinese yuan (CNY) against the U.S. dollar at 7.1368 prior to the market opening. This rate serves to set the trading range for the spot yuan. The new rate is weaker than previous fix which was 7.1283 but it is still 300 pips higher than what was expected by the market.
As soon as the market opened, spot yuan was trading at $7.1698. However, the value of the yuan quickly weakened, reaching as low as 7.1877, representing a decline of 0.11% from the previous day’s close.
Dollar index (.DXY ),…