China’s yuan strengthens past 7 per US dollar amid easing of coronavirus curbs
- China’s onshore yuan finished the domestic trading session on Monday at 6.9561 per US dollar, the strongest close since September 13
- The currency was bolstered by Beijing easing some coronavirus curbs and expectations of slower US interest rate increases
China’s yuan firmed past the closely watched level of 7-per-US dollar on Monday, closing at its strongest since mid-September, as Beijing eased some of its strict coronavirus curbs, potentially attracting fresh foreign inflows.
The Chinese currency was also bolstered by expectations of slower US interest rate increases, which knocked the US dollar index to near five-month lows.
China’s onshore yuan eventually finished the domestic trading session on Monday at 6.9561, which was its strongest level since September 13.
The People’s Bank of China had earlier set the yuan’s midpoint at 7.0384, which was the strongest level since November 16, with the currency allowed to trade within a 2 per cent range on either side.
The China reopening trade maintained its strong momentum in the beginning of this week. The positive headlines continued to fuel risk sentiment in China
The blue-chip CSI 300 Index in Shanghai also closed up 2 per cent, while Hong Kong’s Hang Seng Index climbed 4.5 per cent to end at the highest level since September 1.
Other Asian shares, meanwhile, extended their rally, as investors hoped a China reopening would eventually brighten the outlook for global growth and commodity demand.
“The China reopening trade maintained its strong momentum in the beginning of this week. The positive headlines continued to fuel risk sentiment in China,” said Ken Cheung, chief Asian foreign exchange market strategist at Mizuho Bank.
Maybank also attributed the yuan’s strength to “the broader depreciation in the [US dollar]”. The US dollar index has slumped by nearly 9 per cent from its September 28 peak.