Yuan Taps New Low Versus US Dollar as Investors React to Endorsement of Chinese President’s Third-Term Bid – Economics Bitcoin News

The Chinese yuan’s offshore exchange rate against the U.S. dollar fell to a new all-time low of 7.33:1 just over a day after the conclusion of the Chinese Communist Party’s congress which gave President Xi Jinping the mandate to lead the country for the third time. Concerns over Xi’s unprecedented third term, as well as the reshuffle of his top team, are said to have sparked a sell-off of stocks that wiped billions from the wealth of China’s super rich.

The Chinese Yuan has fallen by 7% since late August

The Chinese currency’s offshore exchange rate versus the U.S. dollar tapped a new all-time low of CN¥7.33:$1 when it fell by 1.5% some 24 hours after the conclusion of the Chinese Communist Party (CCP)’s congress. According to one report, the currency slipped because the CCP congress, which endorsed President Xi Jinping’s bid to lead the country for an unprecedented third term, did not ease investor concerns over the well-being of the world’s second-largest economy.

The offshore unit’s fall to its lowest level in more than a decade also came as the People’s Bank of China (PBOC) reportedly ended its long-running policy of fixing the yuan. In addition, the yuan lost ground versus the greenback on the onshore markets, dropping by 0.6% on October 24 to CN¥7.2648. Since late August 2022, when the exchange rate was around CN¥6.86 per dollar, the yuan has now depreciated by almost 7% versus the dollar.

Like other international currencies, which have lost ground to the U.S. dollars in 2022 and beyond, the yuan depreciated every time that the U.S. Federal Reserve increased interest rates. Although the hikes are intended to tame the United States’ rising inflation rate, each round appears to make the dollar stronger. Many currencies, including the dollar, euro and yen have seen record lows against the greenback, such as the Swiss Franc, the Swiss Pound, the Swiss franc, the Swiss franc, and the Euro.

Analysts are predicting another Fed hike in November. This means that there’s a possibility of the yuan falling further against the greenback. This sentiment is backed by a recent Bloomberg study which reportedly found that half of the 30 yuan traders interviewed thought the yuan would eventually drop to CN¥7.5 per dollar.

Stock Sell-off Erodes Wealth of China’s Richest

Meanwhile, another report said President Xi Jinping’s growing grip on the government, which was confirmed by the recently concluded congress, had helped to trigger a sell-off of stocks which saw China’s super rich lose around $9 billion. Commenting on the billionaires’ losses, Kenny Wen, the head of investment strategy at KGI Asia, said:

Weak investor sentiment is evident in the slump we are seeing today. They are trying to keep their hands on the ball and wait to see what the Chinese will do after the reshuffle.

According to the report, even before the October 24 sell-off, President Xi’s “Zero Covid” policies had already ensured 2022 would be the worst year for China’s wealthiest individuals.

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Terence Zimwara

Terence Zimwara was a Zimbabwean award-winning journalist and author. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.

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