The Hui of the Chinese Yuan Tuesday to its lowest level in nearly 15 years on Tuesday as investors fled Chinese assets amid concerns about the dramatic Xi Jinping He moved to tighten his grip on power in a major reshuffle of Communist Party leaders
In the tightly controlled domestic market, the yuan fell sharply, hitting its lowest level since late 2007. The last time It was down 0.6% at about 7.3 per dollar. The currency has lost 15% against the US dollar this year.
In trading outside mainland China, the yuan fell briefly to around 7.36 per dollar early Tuesday, its lowest level ever, according to Refinitiv, whose data goes back to 2010. The yuan later pared losses, trading at 7.33 by It’s 3:35 pm. Hong Kong time (3.35 a.m. ET).
The currency was pegged at 8.28 to the US dollar for years until 2005 when China moved to a “managed floating exchange rate”. Then its value has steadily risen, peaking at around 6.01 in 2014.
The declines came along with a historic market defeat for Chinese assets worldwide. On Monday, Chinese stocks tumbled in Hong Kong and New York, wiping out billions of dollars from market value. Hong Kong’s Hang Seng Index (HSI) closed 6.4% lower. The Nasdaq Golden Dragon China Index, which tracks several famous Chinese companies listed on Wall Street, Dive more than 14%. On Tuesday, the Hang Seng Index (HSI) fell further and fell 0.2% in afternoon trade.
The massive sale came just days after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi has held key positions with loyal loyalists.
A number of top officials who supported market reforms and an opening of the economy were missing from the new top team, raising concerns about the country’s future direction and its relations with the United States.
International investors were horrified by the result of the cabinet reshuffle being dumped in Chinese assets despite a stronger-than-expected release. Chinese GDP data on Monday. They are concerned that Xi’s tight grip on power will perpetuate Beijing’s current policies and further affect the economy, which despite a rebound last quarter is still growing well below the official target of 5.5% for this year.
Ken Cheung, chief Asian forex analyst at Mizuho Bank, said the Chinese leadership reshuffle “has raised concerns about continued unfavorable policies for the market and increased risks of policy mistakes under President Xi’s grip on power in the coming years.”
“Foreign investors have taken measures to reduce their exposure to Chinese assets,” he said, adding that the Chinese currency is facing increasing capital outflow pressures.
The Chinese yuan, along with other major global currencies, has weakened rapidly against the dollar in recent months. The dollar rose to a two-decade high against a basket of major currencies, buoyed by a hawkish Federal Reserve trying to contain runaway inflation.
The yuan is on track to record its worst year since 1994 – when China devalued its currency by 33% overnight as part of market reforms.
#Chinese #yuan #falls #concerns #Xis #term #CNN #Business