Skip to content USDCNH Analysis – 14-October-2024
The offshore yuan fell beyond 7.07 against the dollar after China declared a new economic stimulus plan to revive its economy.
This weekend, the Chinese authorities announced initiatives to strengthen the real estate sector, increase public debt to fuel economic growth, enhance bank capital to encourage lending and provide financial aid to low-income families. Despite these efforts, the market response was lukewarm, as no significant additional stimulus actions were announced.
Inflation Data Disappoints
Adding to the pressure on the yuan, recent consumer inflation figures were lower than expected, hitting the lowest mark since June. This highlights the urgent need for more decisive policy actions from the Chinese government to boost the economy.
Additionally, producer price deflation has intensified, continuing a 24-month trend and recording the most severe drop since March. This suggests that domestic demand remains weak despite ongoing attempts by the government to stimulate economic activity.
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