Chinese Yuan Hits Three Month High Against the Greenback


The Chinese currency hit a three month high against the US dollar on 17 May.

The median quote for Chinese yuan on Wednesday was 6.8635 to the dollar, for a rise of 155 basis points compared to the previous trading day.

According to Shanghai Securities Journal domestic experts unanimously expect the RMB to continue to rise against the US dollar, as the Chinese economy shows signs of improvement, exports post rapid growth, monetary policy holds steady and China’s cross-border capital flows even out.

“At present foreign exchange reserves have risen for three successive months, and in April China’s cross-border capital flows continued to shift to a favourable position” said Ying Xiwen, a senior researcher with China Minsheng.

“It is expected that the trade surplus in Q2 will be greater than in Q1, providing support to RMB exchange rates.”

Analysts note that another key factor supporting a secular rise in the Renminbi is the One Belt One Road initiative, which will provide a major boost to internationalisation of the Chinese currency for trade invoicing purposes.

The market already expects exchange rates to remain stable while concern over capital outflows is fast diminishing.