China’s yuan ‘trading like a safe haven currency’ as Ukraine crisis roils markets
- The yuan is still hovering near a four-year high after Russian leader Vladimir Putin ordered an operation to demilitarise Ukraine.
- The yuan dropped on news of the attack, but its decline against the US dollar has been more muted than peers.
The yuan is standing out for its resilience as global markets reel from Russia’s attack on targets across Ukraine.
“Yuan has been trading like a safe haven currency during the Ukraine crisis,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore.
“Prospects for further easing should see growth recover, hence keeping Chinese equities resilient even as US equities have sold off.”
The yuan’s correlation to global volatility dropped to a three-year low earlier this week, underlying a haven status partly due to efforts by Chinese policymakers to ease to support economic growth.
The nation’s sovereign bonds, which lured a record 575.6 billion yuan (US$91 billion) in inflows last year, have also been touted as potential alternatives to US Treasuries.