As the U.S. Dollar nears a 10-month low, the Chinese Yuan continues to rise in forex markets. In fact, the Yuan is experiencing its longest stretch of gains since 2015, as it rose for the sixth day in a row on July 16. The recent success of the Chinese currency can be attributed to a stronger fixing of the central bank and data that showed that China’s economy held up during the second quarter.
Reason for Growth
China’s gross domestic product rose to 6.9% in three months, beating Bloomberg’s median forecast of 6.8%. At the same time, June’s industrial output, fixed-asset investment, and retail sales all surpassed estimates. As a result, July has been an important month for the Yuan, as its six-day advance of 0.5% increased its value to 6.7753 per U.S. Dollar.
Experts don’t see the rising currency depreciating anytime soon. In fact, based on recent fluctuations in the forex market, Bloomberg predicts that the Yuan will continue to rise in 2017. According to a recent Bloomberg survey, the median forecast predicts that the Yuan will increase to 6.92 per U.S. Dollar by the end of 2017, amounting to an additional increase of 0.1447 in just under six months.
Financial Changes To Come
The success of the Yuan will be contingent on some of the changes that will be happening to the People’s Bank of China. Chinese President Xi Jinping addressed the issue at the National Financial Work Conference, a closed-door conference on financial regulations that commences once every five years. Among the announcements was the eventual establishment of a cabinet-level committee to coordinate financial oversight.
Unknowns about the future of the PBOC and its new committee, combined with the naming of a successor for PBOC governor Zhou Xiaochuan, can certainly affect the Yuan in a positive or negative manner, so we will have to wait and see how these changes will influence the forex markets.