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China’s yuan strengthens amid assets boom

Abstract : China's currency, the yuan, has strengthened against the U.S. dollar as foreign funds flock to yuan-denominated assets betting on the country's economic recovery.

BEIJING, July 14 (Xinhua) — China’s currency, the yuan, has
strengthened against the U.S. dollar as foreign funds flock to
yuan-denominated assets betting on the country’s economic recovery.

Since July 6, the yuan has gained 600 pips to below seven against the
dollar, while overseas capital inflows into the Chinese A-shares in the
first 11 days of July topped that of June to hit 65.37 billion yuan
(about 9.34 billion U.S. dollars), according to financial information
provider Wind.

Reversing pandemic-triggered retreats in March, overseas capital
regained net inflows into the A-shares in April, and went on to expand
over 20 percent year on year in June.

Overseas investors have also been increasing their holdings of
Chinese bonds in a net amount of 322.4 billion yuan in the first six
months of this year, 1.4 times that of the same period last year, data
from the mutual market access scheme Bond Connect showed.

Analysts say market confidence in yuan-denominated assets was boosted
by China’s leading position in COVID-19 control and economic recovery.

China’s economy will be among the first in the world to rebound under
stepped-up recovery of economic activities, and the country’s
accomplishments in fighting COVID-19 also appeal to global investors,
said Guan Tao, an economist with BOC International.

In its latest issue of World Economic Outlook, the IMF projected a
1-percent growth for the Chinese economy in 2020 as opposed to
overwhelmingly negative figures for other economies, a nod to China’s
performance against the COVID-19 fallout, said Zhu Jianfang, chief
economist with CITIC Securities.

IMF data also showed that the yuan’s share in global forex reserves
hit a record high of 2.02 percent as an increasingly global currency,
another reason for its future strength, according to Cao Yuanyuan, an
analyst with Golden Credit Rating International.

The yuan is expected to strengthen against a basket of currencies in
the near term, buoyed by economic fundamentals and anti-cyclical
measures to keep the yuan stable, as well as the interest rate gap with
the United States, said Cao. Enditem

About Xinhua Silk Road

Xinhua Silk Road (en.imsilkroad.com) is the Belt and Road Initiative (BRI) portal. China’s silk road economic belt and the 21st century maritime silk road website, include BRI Policy, BRI Trade, BRI Investment, Belt and Road weekly, Know Belt and Road, and the integrated information services for the Belt and Road Initiative (BRI).

Source: China’s yuan strengthens amid assets boom

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