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The yuan may reach a record low this year


August, 29 2023
watermark Economic news

Analyzing the dynamics of the Chinese yuan, experts suggest that the currency may fall to the rate of 7.6 against the dollar by the end of the year. Since January, the offshore yuan has depreciated by about 5%.


The reason for such a decline in China's national currency was Beijing's unsuccessful efforts to revive the economy – they have not paid off and do not inspire confidence in investors yet.


Unlike its mainland counterpart, the offshore yuan is used by investors and businesses outside mainland China and is less restricted by government control. The People's Bank of China determines the trading range for the mainland yuan every day, and the offshore yuan depends more on the free-floating exchange rate.


When the difference between them becomes too big, Beijing intervenes. So, recent attempts to tighten the offshore yuan included an increase in sales of dollars to buy yuan and an increase in the cost of short currency sales.


The weakening of the offshore yuan is also associated with poor economic indicators in China and pessimistic expectations about the country's economy. Here we can highlight the crisis in the real estate market, the decline in manufacturing and retail trade, as well as high youth unemployment and deflation of consumer prices.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.