Bloomberg
Chinese yuan becomes latest victim of Treasury sale
(Bloomberg) – The Chinese yuan has wiped out all of its gains against the dollar this year, the latest to fall prey to the Treasury-led global market liquidation. closed last year. At its January high, it was up 1.6% from 2020, as the economy rebounded and investors poured money into the Chinese bond market. the pandemic has turned into fears that central banks will withdraw stimulus sooner than expected. leading to higher bond yields. This latest wave of sales in the market was boosted by the US stimulus package and better data on Chinese exports. “Soaring US Treasury yields and a rebound in the US dollar are putting pressure on emerging Asian currencies, including the renminbi,” said Ken Cheung, chief currency strategist for Asia at Mizuho Bank Ltd in Hong Kong. “Foreign investors may have started to reduce their exposure to emerging market assets and repatriate dollar capital. We are becoming more cautious on the outlook for CNY in the near term. Monday’s rout through the markets accelerated as 10-year Treasury yields hit 1.61%, approaching Friday’s high. A Bloomberg gauge of the dollar’s strength gained as much as 0.5% to reach its highest level in nearly four months. Onshore yuan trading volumes hit $ 48.9 billion on Monday, the highest level in more than two months. Some clients of banks that previously racked up dollars were selling positions at higher prices, according to China-based traders, who asked not to be identified because they are not allowed to speak publicly. for greenback futures prices, including from customers who had just signed import orders and sought to lock in exchange rates to guard against further risks of the yuan depreciating. High valuations of some stocks are fueling bearish sentiment. For more articles like this please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of trading information. © 2021 Bloomberg LP
