April 25, 2024

Two Year Weakest Value Recorded for Chinese Yuan Due to Hawkish Fed Signals

The value of the Chinese yuan experienced a significant dip in the recent trading session. The report shows that this is the lowest level the Chinese yuan has hit in the past two years.

China Yuan Fell Due to Hawkish Comments

The value of the Chinese yuan experienced a dip after Jerome Powell, the Federal Reserve chairman commented on the current economic situation.

At the Jackson Hole meeting, Jerome Powell announced that the global economy has been deteriorating at a fast rate.

However, the United States has been able to overcome many challenges. The country has recorded very promising results for the CPI and the NFP.

As they have recorded positive outcomes for the particular factors, they have gained confidence and an opportunity of growing more aggressively against the rising inflation rates.

This is the reason they have decided that they will not lower their aggression against fighting the inflation rates.

The Feds had announced that they would reduce the hike in the interest rates prior to the CPI and the NFP stats had come out.

However, the Feds are now adamant that they will continue hiking the interest rates as aggressively as they had previously communicated.

Greenback Recorded a Rally

Just as Powell’s Jackson Hole comments were posted, the value of the greenback recorded a substantial rise in its value.

The rally continued growing stronger and in no time, the dollar was performing really well against the basket currencies.

Yuan’s Performance against the USD

Just as the price of the USD started to experience a surge, the Chinese yuan recorded a significant drop in its value versus the greenback.

As per stats, the value of the Chinese yuan lost 0.5% value against the greenback in the latest trading session.

Following the dip, it traded at 6.9277 against the dollar, which is the lowest price the Chinese yuan has hit against the USD since August 2020. This was the value of the Chinese yuan recorded outside of mainland China.

The Chinese yuan hit recorded a dip in the onshore trading sessions, slipping by 0.6%.

Weaker than Expected Data from China

Another negative factor for the Chinese yuan was the weak data that was shared by the government of China for the economy.

This also resulted in the Chinese yuan taking a negative hit and the Chinese stock markets also recorded huge dips.

Asian Stock Markets

After Powell’s comments, even the Asian stock markets have recorded a dip.

The Korea Kospi exchange has recorded a 2.1% dip, while the Nikkie 225 index has recorded a 2.7% dip. Then there is the Shanghai Composite which has recorded a 0.1% dip plus the Hang Seng index which has dipped by 0.8%

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