CHINESE YUAN SINKS TO RECORD LOWS AGAINST THE DOLLAR

Wed 28 September 2022:

In offshore trading, the Chinese yuan hit a record low against the US dollar, joining a long list of other currencies that have seen significant drops against the dollar.

According to the Bloomberg news agency, the offshore yuan, which is traded outside of mainland China, dropped to $7.2386 against the dollar on Wednesday, marking its lowest level since Beijing loosened restrictions on trading the currency in Hong Kong in 2010.

The onshore yuan, which is circulated in mainland China and more tightly controlled than its offshore counterpart, fell to a low of 7.2302 per dollar in early trade, the weakest since the global financial crisis in 2008.

The declines come despite China’s central bank on Monday announcing moves to stem the yuan’s decline by making it more expensive to bet against the currency.

As aggressive rate hikes by the US Federal Reserve fuel pessimism about the outlook for the global economy, foreign investors have rushed to buy up the dollar, a traditional safe haven, driving the value of the currency to multi-decade highs against other important currencies.

Investors dumped the British pound on Monday, sending it to a record low against the dollar as a show of disapproval for London’s economic policies, which include sizable tax cuts paid for by sharp increases in government borrowing.

The COVID-19 lockdowns, droughts, and a downturn in the highly indebted property market have all recently hurt China’s economy.

With its gross domestic product (GDP) growing by just 0.4 percent year over year between April and June, the second-largest economy in the world narrowly avoided contraction in the second quarter.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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