Chinas yuan has ped for 5 months straight as investors flock to the decades-high dollar
Source
American Shipper
Post Date
08/12/2022
• Chinas yuan is on its longest losing streak since October 2018, according to the Wall Street Journal.
• The currency has lost 5% against the greenback so far in 2022 amid downbeat economic data from Beijing. • Higher US bond yields and an aggressive Fed have helped pushed the dollar 11% higher so far this year.
Chinas yuan has ped 5% against the dollar so far in 2022, ping for five consecutive months. That marks the currencys longest losing streak since October 2018, according to the Wall Street Journal. The Federal Reserves aggressive policy has pushed the dollar to 20-year highs. The greenback has climbed 11% this year amid sky-high inflation and declining gold purchases. Goldman Sachs chief commodities strategist Jeff Currie said a weaker yuan means Chinese consumers — who make up roughly one-third of retail gold purchases — have less purchasing power to buy the safe-haven metal. "As the Chinese yuan fell, gold followed it lower," Currie told the Journal. Similar to Chinas currency, bullion has ped for four months straight and is currently down more than 12% from March highs. Gold is typically viewed as a safe-haven investment, like the greenback, though that hasnt played out in 2022 because of the Feds hawkish policy. As US bond yields rise with interest rates, the dollar has rallied dramatically, which then pushes down competing currencies such as the yuan — which ultimately makes gold more expensive for overseas customers and emerging-market central banks. Meanwhile, Chinese investors have been stockpiling cash rather than pumping it back into the economy, which has also pushed the dollar higher this year. Instead of letting yuan flows hit the real economy, the money is ing up in bank bonds and corporate debt.
