China’s yuan set for biggest yearly loss since 1994

And that’s despite the currency’s strong recovery over the past two months, with USD/CNY peaking at 7.30 from late October to early November. The exchange rate above 8 is the worst performance of the Chinese yuan against the dollar since 199 , when China combined market and official exchange rates. USDCNY I have argued several times over the year that if China allows its currency to weaken, that is a significant bearish signal to the dollar’s upside – as we saw here in August. As such, it will continue to be a key driver of the dollar next year as the Fed’s tightening cycle is questioned and China moves away from its zero Covid policy.

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