The Chinese Yuan Just like it’s Economy Can't Stop Collapsing
The Chinese Yuan is one of the most popular world currencies, thanks to China's influence on the world economy, including its influence in Africa and Latin America, where China has pushed to expand its commercial influence. However, in the midst of this, China's economy and currency are in trouble. There has been concern that emerging markets have lost their anchor as a result of the yuan's decline to a two-year low. They are in a bear market, and it’s spreading rapidly.
Welcome to Savvy Economists. In this video, we will discuss the Chinese Yuan and how it’s super sliding down quickly and won’t stop. We will also discuss the effect of this on the Chinese economy. Keep watching.
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Aside from Beijing's tight links to Moscow in the wake of Russia's invasion of Ukraine, the connections have sparked worries that China would be subject to Western penalties if it supports Moscow. This includes the great worries about a citywide lockdown in Beijing, the onshore Chinese yuan dropping to its lowest level in more than two years. Investors have been pulling money out of China since the beginning of the year, 2022.
Judging from recent statistics, there has been a lot of slopes down of the Chinese yuan, which is very glaring.
The largest daily decrease of the Chinese Yuan was recorded on August 3rd. Then the People's Bank of China set the yuan reference at 6.7730 per dollar, 0.5% lower than the previous print. This figure was essentially in line with the consensus expectation from an analyst and trader poll conducted by Bloomberg as they have been monitoring the Chinese Yuan and its strength. After the central bank decided to relax policy in opposition to the tightening trend, the offshore yuan fell drastically by as much as 1.2%. This made the dollar stronger against the Chinese Yuan as it lost about 2,000 basis points against the dollar.
In the same month in August 2022, the yuan fell for the sixth month in a row. When measured, it had one of the worst performances compared to other Asia currencies this quarter. And aside from that, it is likewise down approximately 8% against the dollar this year. With this drastic decrease, many are losing hope in the currency as more than 60% of readers online and at the terminal projected that the currency, which is approximately 6.8 per dollar, believe that the currency will still decline to 7.2 per greenback. In fact, a lot of analysts are lining up to forecast a decline in the yuan.
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