A currency controlled by an… openly secretive and authoritarian regime is not a good asset unless you want to trade to with them.
From the start of the year (according to our calendar), both the offshore and onshore exchange rates of the chinese yuan have observed a reduction in comparison to the U.S. dollar. According to Hong Kong experts, this slight depreciation has significant short – term benefits. If the chinese yuan remains relatively weaker, it could lead to export goods being priced more affordably when denominated in U.S. dollars. This situation benefits chinese exporters as they can manufacture and sell products at lower expenses, thereby bolstering their competitiveness in the global market. This, in turn, has the potential to attract a larger number of foreign buyers interested in purchasing chinese exports. Moreover, there’s the possibility of an uptick in domestic consumption, allowing chinese citizens to enjoy more economical shopping and tourism experiences.
Looking ahead to the medium term, the trajectory of the yuan will depend on China’s economic record as well as the progress of foreign economies – trading partners.
