Skip to content USDCNH Analysis – 24-June-2024
The offshore yuan steadied at 7.29 per dollar, close to its lowest point in seven months. This happened as the People’s Bank of China set the official rate lower for the seventh time. The PBoC fixed the midpoint at 7.127 per dollar, the weakest since November 21, 2023. This indicates the bank is not too concerned about the yuan losing value.
China’s Industrial Profits Slow in May
Since the beginning of 2023, the yuan has faced pressure due to domestic issues like a struggling property market and low consumer demand. Declining yields have led to capital outflows, with foreign investors hesitant to invest in China’s stock market.
Data released on Thursday showed that China’s industrial profits grew much slower in May, underlining the difficulties the second-largest world economy faces due to weak domestic demand. Investors are now focused on the upcoming U.S. presidential debate, which could affect the dollar-yuan exchange rate.
USDCNH Analysis – 24-June-2024
Multiple economic factors influence the USD/CNH pair in the U.S. and China. The recent stability of the offshore yuan at 7.29 per dollar, despite being near a seven-month low, is significant. The People’s Bank of China (PBoC) has set the official rate lower for seven consecutive sessions, indicating a strategic approach to managing the yuan’s value. Setting the midpoint rate at 7.127 per dollar, the weakest since November 2023, suggests that the PBoC is not too worried about the yuan’s depreciation.
The yuan has been under considerable pressure in 2023 due to several domestic issues. A weakening property sector and low consumer demand are significant contributors. Additionally, falling yields have caused capital outflows, and foreign investors remain cautious about China’s stock market. The slower growth in China’s industrial profits in May further highlights the economic challenges.
The U.S. presidential debate could impact the USD/CNH pair. Political events in the U.S. often influence the dollar, affecting the yuan. Investors will closely watch these developments to gauge their potential impact on the exchange rate.
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