Fawad Razaqzada affirmed that the end to the Chinese renminbi’s struggle is unknown at this point. This foreign exchange market analyst at Forex.com remarked that this latest forex development happens as the Chinese economy grapples.
We want to share this latest foreign exchange-related news with our followers who hold Chinese renminbi units. We believe it can help them know how they can manage this foreign currency this week.
Razaqzada explained that China’s struggling economy has its zero-COVID policy weakening the growth momentum that the economy has obtained. He remarked that it is very challenging to witness a way out for the Chinese renminbi as long as such a policy remains in place.
The foreign exchange market expert cited that he sees the US dollar soon running higher to 7.20 Chinese renminbi.
At the time of writing this forex news, US$1 is equivalent to 7 Chinese renminbi, per the information posted on the foreign exchange conversion website Xe.com.
Foreign exchange market experts like Razaqzada remarked that the US dollar’s strength is not set to wane in the near term. This year, the greenback has been crushing the Chinese renminbi and other rivals like the euro and the Japanese yen.
The United States Federal Reserve System is the marquee driver behind the US dollar’s relentless jump, with policymakers attacking hot inflation with massive interest rate hikes to decelerate economic activity.
The US central bank’s fifth interest rate increase this 2022 is expected on Wednesday, September 21, 2022, which will push the Fed funds rate up from its 2.25 to 2.5-percent range.
The offshore Chinese renminbi has seen itself pushed by the rising US dollar earlier past the critical threshold of 7 Chinese yuan per US dollar for the first-ever time in over two years overnight.
China’s official currency broke the key level soon after markets opened last Friday, September 16, 2022, per the report posted on the Internet by Singaporean business newspaper Business Times.
Data indicated that China’s economy was surprisingly resilient last month. Both retail sales and factory output in the country expanded more than anticipated.
However, a deepening property plummets weighed on the outlook. Last Friday’s data exhibited prices and sales plunged in China’s property sector, which is a significant growth engine for the world’s second-largest economy.
Additionally, the Chinese renminbi fell despite last Friday’s economic data, including August industrial production and retail sales, which defeated expectations.
As China’s official currency dropped to a two-year low versus the US dollar last week, it is recorded to have lost a grip of almost 10 percent this year. Meanwhile, the People’s Bank of China has worked on giving upside support in recent weeks.
This effort by the Chinese central bank is partly done by fixing the Chinese renminbi’s daily rate above market expectations as it prepares for the next Fed interest rate hike.
We find it concerning to learn from foreign exchange market experts that the Chinese renminbi will continue to feel the pressure of the unceasingly intense and rising US dollar.
We gathered that China’s official currency had lost a grip of almost 10 percent this year. We do hope the People’s Bank of China will find ways to help the Chinese consumers deal with this forex trend which can certainly be harsh for them.