China’s offshore yuan breaches key level of 7 per US dollar for the first time since July 2020
- The yuan traded in the offshore market weakened about 0.5 per cent to 7.009 against the US dollar
- The last time the exchange rate between the offshore yuan and US dollar broke the critical 7-to-1 level was in July 2020
China’s currency broke through the psychologically important level of 7 yuan per US dollar on Thursday, amid a souring outlook for the world’s second-largest economy due to its strict zero-Covid policy and a property crisis.
The yuan traded in the offshore market weakened about 0.5 per cent to 7.009 against the US dollar. In the onshore exchange market, the yuan held at 6.9950 against the US dollar.
Wang Chunying, deputy director of the State Administration of Foreign Exchange (SAFE), said the performance of the yuan exchange rate had been relatively stable despite the fast depreciation of other currencies against the US dollar.
Chinese banks reported a US$25 billion of surplus in foreign-exchange settlements last month, according to SAFE data released on Thursday afternoon.
Central bank data also showed that foreign investors trimmed their holdings of Chinese bonds by 30 billion yuan (US$4.2 billion) in August.
“As the market-oriented adjustment mechanism becomes more mature, and the forex market players become more rational, China’s ability to counter external changes will improve further. All will lay a solid foundation for forex market operations,” Wang said.