What Europe’s coronavirus woes mean for the yuan-euro exchange rate

Name: Stepped-up Covid-19 restrictions ‘absolutely necessary’ as Europe enters new wave ahead of winter
Uploaded: 2020-11-03T11:45:09.000Z
Duration: 4 min 6 s
Description: Stepped-up Covid-19 restrictions ‘absolutely necessary’ as Europe enters new wave ahead of winter

European governments are still struggling to suppress a Covid-19 pandemic that Beijing now seems to have contained. The policies of the two central banks are also a study in contrasts

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A masked couple ride an electric scooter past the Invalides memorial in Paris on October 25. A curfew intended to curb the growing spread of the coronavirus has been imposed in many regions of France including Paris and its suburbs. Photo: AP

Neal Kimberley

Published: 7:45pm, 3 Nov 2020Updated: 10:32pm, 3 Nov 2020

Traders who see further gains for the yuan on foreign exchanges don’t need to focus exclusively on the level of the renminbi versus the US dollar. The euro-yuan exchange rate is a case in point. There is every possibility the renminbi could strengthen further against the euro.

In the first instance, the contrast between the euro-zone economy and that of China is striking. With European governments still struggling to suppress a Covid-19 pandemic that Beijing now seems to have contained, the euro-zone economy is in poorer shape than China’s, which is showing growing signs of recovery.

Admittedly, data released on October 30 by the European Union’s statistics office, Eurostat, showed that gross domestic product in the 19-country euro zone had expanded by 12.7 per cent quarter on quarter in the July-September period following a second-quarter slump of 11.8 per cent.

France, Italy and Spain posted quarterly GDP growth of between 16.1 and 18.2 per cent while Germany, the largest economy in the euro zone, registered an 8.2 per cent expansion quarter on quarter, although Berlin still expects that as a consequence of the pandemic, the German economy will have contracted by 5.5 per cent over 2020.

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Stepped-up Covid-19 restrictions ‘absolutely necessary’ as Europe enters new wave ahead of winter

But this third-quarter data arguably flatters to deceive. Such is the scale of rising infections from the pandemic in the euro zone that member-state governments are reintroducing tighter controls. They ma be short of a total lockdown, but nevertheless they are bound to have a marked economic impact.

What Europe’s coronavirus woes mean for the yuan-euro exchange rate

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} European governments are still struggling to suppress a Covid-19 pandemic that Beijing now seems to have contained. The policies of the two central banks are also a study in contrasts

European governments are still struggling to suppress a Covid-19 pandemic that Beijing now seems to have contained. The policies of the two central banks are also a study in contrasts