Renminbi – also known as Renminbi — It fell about 0.5% against the dollar on Monday in offshore trading outside mainland China. It traded at 6.9277, its lowest level since August 2020.
The onshore renminbi also fell sharply, down 0.6% from the previous session.
“The US Federal Reserve’s hawkish messaging and growth divergence favor the US dollar, which will continue to put pressure on Asian currencies,” Citi analysts wrote to clients Monday. pointed out.
The recent depreciation of the yuan has also been driven by “worse-than-expected economic data and rate cuts,” they added.
Earlier this month, the People’s Bank of China unexpectedly cut interest rates. That comes after new data showed last month that the economy was losing momentum as coronavirus-induced lockdowns resumed and a real estate recession deepened.
The offshore renminbi has depreciated 3% against the US dollar this month, down 9.4% since March.
Citi analysts say the yuan’s depreciation since March has been triggered by the easing of bullish positions in the yuan and massive capital outflows as traders fear the coronavirus pandemic will hurt economic growth. It is said that it became
Another driving force comes from the government side. Chinese officials are allowing the yuan to depreciate “gradually”, which could benefit exporters by making goods more competitively priced.
“While this is unlikely to cause the authorities to pursue aggressive currency depreciation, it is likely to allow market forces to undermine or underperform the yuan,” they said.
Citi analysts expect the yuan to eventually reach 6.95 against the US dollar.