The Chinese currency is already rising against the US dollar and will receive another boost if the Federal Reserve cuts interest rates
The Chinese yuan is set to continue making gains against the US dollar over the coming months, as China’s central bank sets strong daily reference rates for the currency and traders bet on possible US interest rate cuts, analysts said.
On Monday, the central bank set the daily reference rate just below that year-high peak, at 7.1072 per US dollar.
“We see the unusual appreciation bias in the PBOC’s daily fixing as a policy push to guide the yuan gradually stronger,” Goldman Sachs analysts said in a research note on Monday.
The analysts noted that historically, China’s central bank had tended to set the rate weaker than spot when the dollar was strong and the yuan faced depreciation pressure – a pattern not seen in recent market moves.
