Chinese yuan beats Asian peers with biggest weekly gains
The yuan has continued to strengthen against the US dollar at the end of the week, rising most of all currencies in the Asia region, amid the strong recovery of the Chinese economy.
Chinese currency trading on the mainland jumped by around half a percent to 6.6789 per US dollar on Friday morning, Bloomberg data shows. The onshore yuan, officially known as the renminbi or RMB, was still up 0.3 percent against the greenback as of 7am GMT, while the offshore renminbi was up around 0.2 percent.
The appreciation of the Chinese currency comes as the world’s second-largest economy continues to rebound from the coronavirus crisis, while other major economies are still struggling to get back on track amid rising numbers of infections.
The Chinese economy expanded 4.9 percent in the third quarter, and the country’s exports and imports rose sharply in September. The yuan is set to finish October with around a 1.5-percent gain. It has strengthened significantly so far this year, rising around four percent against the dollar.
Some analysts say they see room for the Chinese currency to march still higher. According to UBS Global Wealth Management’s Dominic Schnider, “the stars are really lining up” for a stronger yuan.
“A growing current account surplus, due to stronger exports and a smaller service-balance deficit, tends to favor a stronger currency in the quarters ahead,” he told CNBC earlier this week, adding that strong economic data and the yuan “yield carry” can facilitate further growth. The yield carry refers to a strategy whereby investors make a profit on the difference between interest paid and interest earned.
The Chinese yuan may become the world’s third-largest reserve currency within 10 years, analysts at Morgan Stanley have predicted.
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