The yuan rebounds, helped by the good performance of Chinese stock markets

The yuan rebounds, helped by the good performance of Chinese stock markets
The yuan rebounds, helped by the good performance of Chinese stock markets

Around 7:50 p.m., the Chinese currency gained 0.43% against the greenback, to 7.2097 yuan per dollar, the highest in two weeks.

The yuan rose against the dollar on Monday, in a context of bargain hunting on Chinese assets, which primarily benefited the stock markets.

Around 5:50 p.m. GMT, the renminbi, the other name of the Chinese currency, gained 0.43% against the greenback, to 7.2097 yuan per dollar, the highest for two weeks. Monday’s variation would be less notable for another currency, but the yuan traditionally moves within very tight margins.

For Marc Chandler, of Bannockburn Global Forex, the Chinese currency benefited from the jump in the yen, “with which it has characteristics in common”.

The Japanese currency suddenly climbed at the start of last week and then on Wednesday, two movements that analysts attributed to a possible intervention by the Japanese authorities to support the yen, which had just fallen to a 34-year low against the dollar.

The yuan also benefited from the momentum of Chinese stock markets. After months of depression, the Hong Kong Stock Exchange began a strong rise just over two weeks ago. The Hang Seng index thus rose by more than 15% over the period.

“This performance forces people to reassess” their positions, explains Marc Chandler, especially in a context of stagnation in the American equity markets for several weeks.

The extent of the yuan’s jump on Monday is also due to the fact that China has just experienced five public holidays, three of which would normally have been trading days.

“As a result, there is a bit of catching up going on,” according to Marc Chandler.

However, the analyst believes that this dynamic is not linked to a new vision of the Chinese economic situation. “I don’t think things have really changed macroeconomically,” he says.

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