Home Economy   Yuan surges by 202 points to 24-month peak

  Yuan surges by 202 points to 24-month peak



By Xie Jun

The yuan continued its recent appreciation trend on Tuesday by surging to a record two-year high.

According to data from the People’s Bank of China (PBC), the country’s central bank, the yuan rose by 202 basis points to 6.4372 on Tuesday. The yuan has been continuously appreciating since January 10.

The yuan appreciated by about 6 percent in 2017, the PBC data showed.

Paul Mackel, head of Global Emerging Markets FX Research at HSBC, said at a press conference held by HSBC in Shanghai on Tuesday that broadly, the currency performance in many emerging markets, including the yuan, will perform better in 2018.

He attributed such optimism to factors including his prediction that the US dollar would likely remain soft this year despite several interest rates hikes to come as well as the increasing commodity prices which support emerging markets’ economies.

The US dollar has been falling recently despite the several interest rates hikes by the US Federal Reserve in 2017.

Mackel also predicts that the yuan’s exchange rate against the US dollar would reach between 6.5 and 6.6 percent by the end of 2018, he told the Global Times on Tuesday.

“It’s very much determined by how we see the dollar trading versus the euro and some other currencies,” he said.

“Although there appears [to be] some mild depreciation for the yuan [in our prediction], our real message is one of flexibility for the exchange rate. The yuan will be a little volatile in 2018, but it will be a comfortable state for the currency,” Mackel said, adding that the yuan’s better flexibility suggests that “some reforms” could continue.

The Chinese government in recent years has enacted reforms to create a domestic currency mechanism that is more market-orientated.

Apart from the yuan, Mackel also said he was positive about the currencies of Brazil, India and Russia.

The PBC pumped 320 billion yuan ($50 billion) into the financial system through open market operations on Tuesday.

The central bank has increasingly relied on open market operations for liquidity management.

Source: globaltimes.com.cn


Please enter your comment!
Please enter your name here