China’s currency the Yuan has soared to a 19-year high, reaching the top end of its permitted trade range. It has increased steadily for seven days straight as bets increase that the world’s second largest economy will regain its momentum.
The currency rose close to 6.2265 per Dollar after touching 6.2262 during yesterday’s trading session. The level is the highest the currency has reached since the Chinese government unified the official and market exchange rates at the end of 1993.
“Capital returns to China as over-pessimism on the economy has been dismissed by recent data,” said Tommy Ong, a Hong Kong-based senior vice president of treasury and markets. “There’s also an expectation that the government will focus on growth instead of stability when the congress ends.”
The Chinese currency hit a new record high against the US Dollar for a second day in a row thanks to bullish sentiment for the currency from Chinese companies. It is expected that the Yuan will continue to strengthen as a result. Traders said companies are offloading hard currency accumulated during the first seven months of the year, during which time the Yuan steadily slid against the Dollar, reducing its attractiveness. However, an improved confidence in the Chinese economy has seen the Yuan’s popularity increase.
One negative of the strong currency is that Chinese exports will become costlier, possibly reducing demand from the nation’s key markets and could prove to be damaging on the industrial sector. For countries that depend on exporting their goods to China, such as the Australia the strong Yuan is a good thing.
The Pound to Euro exchange rate is currently trading at 1.2536
The Pound to US Dollar exchange rate is currently trading at 1.5892
The Pound to Australian Dollar exchange rate is currently trading at 1.5265
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