Skip to Content Facebook Feature Image

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

China

China

China

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

2024-09-26 11:15 Last Updated At:09-27 00:37

The offshore Chinese currency yuan briefly rallied past the 7.0 per dollar milestone for the first time in 16 months on Wednesday, as investors digested China's stimulus measures to stabilize growth and the recent U.S. Fed rate cut kept the dollar on the back-foot.

China's central bank governor Pan Gongsheng Tuesday said that the country will cut the reserve requirement ratio (RRR) by 0.5 percentage point in the near future, providing about 1 trillion yuan (about 142.30 billion U.S. dollars) in long-term liquidity to the financial market.

Depending on the liquidity situation in the market, the RRR may be further lowered by 0.25 to 0.5 percentage point within the year, Pan told a press conference in Beijing.

Meanwhile, the U.S. Federal Reserve announced last week that it will slash the target range for the federal funds rate by 50 basis points, marking the first rate cut since March 2020 and signaling the start of a monetary policy easing cycle.

"On the one hand, as U.S. Federal Reserve kicked off a monetary policy easing cycle, the interest rate difference between the Chinese and U.S. currencies narrowed. On the other, the resilience of China's foreign trade and its high trade surplus have helped stabilize the Chinese yuan exchange rate. The recent introduction of a host of policies to stabilize growth has also significantly boosted market confidence," said Wen Bin, chief economist at the Beijing-based China Minsheng Bank.

Recently, the supply and demand of the foreign exchange market have become more balanced. Data released by the State Administration of Foreign Exchange showed that in August, the cross-border income and expenditure volume of enterprises, individuals and other non-bank sectors has changed from a deficit previously to a surplus of 15.3 billion U.S. dollars.

"The appeal of Chinese yuan assets has increased dramatically, attracting the inflow of overseas capital, and further promoting steady performance and gradual improvement of the Chinese yuan exchange rate. We have every reason to believe that with the continued support of policies and the fundamentals of the economy, the Chinese yuan exchange rate can stay in a balanced range and perform well," said Tian Lihui, director of the Institute of Finance and Development at the Nankai University in north China's Tianjin Municipality.

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

China is promoting high-level opening-up in the financial sector and welcomes foreign-invested enterprises to deepen mutually-beneficial cooperation, Vice Premier He Lifeng said in Beijing on Tuesday.

He, also a member of the Political Bureau of the Communist Party of China Central Committee, made the remarks when meeting with Andrew Schlossberg, President and Chief Executive Officer of Invesco.

Noting that China is continuing to deepen the reform of the capital market, steadily expanding the institutional opening up of the financial sector, and striving to provide high-quality financial services for economic and social development, He said that companies from all countries are welcome to continue deepening investment cooperation with China for mutual benefit and win-win results.

Schlossberg expressed his optimism about the development prospects of China's financial market, saying his company is willing to take China's further comprehensive deepening of reform as an opportunity to continue expanding cooperation with China

China welcomes foreign-invested firms deepening mutually-beneficial cooperation: vice premier

China welcomes foreign-invested firms deepening mutually-beneficial cooperation: vice premier

Recommended Articles