The Chinese yuan climbed to a record level against the U.S. dollar on Monday.
The People’s Bank of China set an all-time high midpoint at 6.0950, 0.1 percent stronger than the previous trading day. Traders expect the yuan’s robust momentum to continue with 2 to 3 percent appreciation seen for the year. That’s due to improved fundamentals and a trade surplus in China. However, volatility is poised to increase because China has started wide-ranging reforms to liberalize its financial markets. The central bank also may soon widen the yuan’s daily trading band.
China’s strong currency also reflects weakness in the U.S. dollar due to surprisingly soft employment data. American employers hired the fewest workers in nearly three years in December.The hiring retreat raises doubts as to whether the U.S. Federal Reserve will continue to cut the size of its bond purchases, dragging the dollar index.
Source: CCTV
