Skip to content USDCNH Analysis – 4-June-2024
The offshore yuan has recently dipped to around 7.25 per dollar (USD/CNH), influenced by ongoing economic concerns and foreign dividend payments. This drop comes despite a weakening US dollar. Efforts to ease property measures in China have not resulted in long-term capital inflows, with analysts from HSBC noting that these inflows are often short-lived.
China Manufacturing Sees Fastest Growth
Another factor contributing to the yuan’s pressure is overseas-listed Chinese companies’ seasonal demand for foreign exchange, which must fulfill dividend payouts by selling yuan.
On a brighter note, a private survey released on Monday indicated that China’s manufacturing activity grew for the seventh month in May, marking the fastest pace in nearly two years. This growth is driven by strong production and an increase in new orders.
Investors are monitoring upcoming economic reports to understand the market’s direction better. Important reports include the US ISM Services PMI and non-farm payrolls, along with China’s new PMI data and trade figures. These reports will offer more insight into the economic health of both countries and help investors make informed decisions in a fluctuating market.
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