Chinese Yuan weakened in three weeks

One year ago on 7 March 2013, US dollar (USD) in relation to Chinese Yuan (CNY) was US$1 = 6.2132 CNY.

Date USDCNY
7 Mar 2013 6.2132
15 Jan 2014 6.031
13 Feb 2014 6.052
4 Mar 2014 6.136
10 Mar 2014, 3.14 pm 6.141

Until 13 February 2014, CNY strengthened consistently against US dollar to US$1= 6.052 CNY. An appreciation of 2.6% over the period (of about 11 months). However, the table turned and CNY weakened from then on for three weeks now. Now US$1 = 6.141 CNY. This is a 1.4% declined over three weeks but still 1.1% higher than 7 March 2013’s exchange rate.

In one analyst report, it was suggested that the central bank of China (PBOC) intervened in the market to buy US dollar and sell CNY in order to weaken CNY. One can only speculate the real reasons for this intervention. I can theorise that a weaker CNY is good for increasing Chinese export to the world (especially US) on a weaker CNY. This way, China can grow the Gross Domestic Product (GDP) to meet its target growth rate of 7.5% for this year.

USDCNY 2013 to 2014

USDCNY 2013 to 2014

 

 

 

 

 

 

Copyright © 2014, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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