The yuan fell to a two-and-a-half-year low on Tuesday as U.S. lawmakers moved ahead with the COVID-19 bailout package amid year-on-year cash demand, according to IBNA. Climbed.
On Monday, the House of Representatives voted to increase stimulus payments to eligible Americans from $ 600 to $ 2,000 and sent the amount to the Senate for a vote. This reduces the demand for safe-haven assets such as the dollar.
Yuan sellers said the indigenous unit is tracking dollar movements during the weakened holiday trade, which is likely to continue until the end of the year.
Prior to the opening of the market, the People’s Bank of China (PBOC) had set the median rate at $ 6.5451, 215 pips or 0.33 percent lower than the previous rate of 6.5236 per dollar.
In the trading market, the yuan opened at 6.5373 per dollar and changed at 6.5318 at noon, 65 pips stronger than before.
Markets widely expect the dollar to continue to weaken in 2021, and such flexibility could support the yuan.
The Fed’s cut in interest rates has eroded the US dollar’s advantage, while their new medium-term inflation targeting framework should keep interest rates low for several years.
The weakening dollar, widening the yield gap between China and the United States, and effective containment of the Corona virus have pushed the yuan back about 10 percent against the dollar since late May.
This year, the yuan was set to record its first three-digit annual profit.
Separately, quarterly cash demand supports higher than yuan, as banks spend more money on year-end administrative checks, households need more money on holiday expenses, and companies need more money on various payments, and withdraw cash. they do.
Forward curves of the currency moved higher as a result of higher demand for the yuan. The next dollar / yuan deal reached 70 on Tuesday morning, the highest level since late September. The one-year contract also reached a three-week high of 1,580 points.