China Central Bank depreciates yuan to lowest since 2008
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Authorities discouraged investing in foreign currency, calling the fall temporary and assuring it would be strengthened in the long term.
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The yuan is now the fifth most traded currency (WSJ)
They yuan continues to depreciate against the US dollar as The People's Bank of China, the national central bank, set the exchange rate to 7.2472 on Thursday - its lowest since January 2008.
The rate has taken a drop by 275 basic points to its lowest since January 22, 2008, when it stood at 7.2556, which has China's Banking and Insurance Regulatory Commission calling on people not to invest in foreign currency, as the yuan fall is just temporary and its position would be strengthened in the long run.
Due to the combined factors of the coronavirus infection, lockdowns, and disruptions in production and logistics chains, starting back in April, the yuan exchange rate plunged by 681 basis points and in light of epidemiological improvements, began to increase again and has been fluctuating since June within no more than 360 basis points.
Regarding China's socio-economic development, authorities announced an agenda to maintain a balanced and stable exchange rate of the yuan, discussed at the opening of the parliamentary session on March 5, including the intention to enforce a strict monetary policy.
On a good note, a report released by the Bank of International Settlements (BIS) showed that the Chinese yuan has moved up to the fifth-most traded position, in terms of total global foreign exchange turnover, with a market share of 7%.
The yuan's new ranking, which increased from eighth place in a 2019 survey, highlights the currency's appeal in the face of efforts to de-dollarize the world's economies and a general consensus among investors about the world's second-largest economy's promising future.
Last September, the Kremlin reportedly stated that Russia wants Chinese yuan-denominated debt to help the Russian market recover. Trading volumes between the Chinese currency and the Russian ruble have grown 40-fold since the start of the year, as per Bloomberg data.
