China’s yuan slid to the weakest in two years as hawkish Fed signals more rate hikes
The yuan — also known as the renminbi — lost about 0.5% against the dollar on Monday in offshore trading outside mainland China. It traded at 6.9277, the lowest level since August 2020.The yuan in onshore trading also weakened significantly, down 0.6% from the previous session.Risk assets The yuan has accelerated its fall against the US dollar this year, as China’s The yuan’s decline since March had been triggered by the unwinding of bullish yuan positioning and large capital outflows as traders were concerned over growth hit from zero-Covid restrictions, the Citi analysts said.Another driver is from the government’s side, as Chinese authorities were tolerant of a “gradually” weaker yuan, which can benefit exporters by making the price of their goods more competitive.”While this is unlikely to push authorities to pursue active currency weakness, they are more likely to allow for market forces driving the renminbi weaker or underperform,” they said.The Citi analysts forecast the yuan to eventually reach 6.95 against the US dollar.
