Following a strong economic recovery in China after the turmoil caused by the Covid-19 pandemic, the Chinese currency hit a 17-month high against the dollar on Friday October 9 – the first working day after the country’s week-long National Day holiday.
And while the yuan’s strength somewhat waned after the People's Bank of China cut foreign exchange forward reserve requirements on October 10 in a bid to curb the currency’s appreciation, it still remains considerably stronger than a month ago.
The yuan traded at 6.75 to $1 on October 16, compared with 6.82 to $1 on September 15, according to currency exchange provider Oanda.com.
“We are likely to see continued yuan strength moving forward though, as China's interest rate differential, portfolio inflows after index inclusion and robust economic recovery all underpin further appreciation,” Jeffrey Halley, senior market analyst from Oanda, said.
In addition, market sources...