China's Yuan sinks to record Low against Dollar ahead of key National Congress
Ahead of the 20th National Congress later this month, China's yuan, also known as the Renminbi, remained near a record low level against the US dollar on the offshore market this week.
The yuan reached a record low in the last week of September against the dollar after hikes in US interest rates made traders convert money into dollars, according to US media reports. This fall comes as major currencies worldwide continue to tumble after the US Federal Reserve's aggressive hikes. This appears to be a trend in recent months, despite interventions by the country's central bank, CNN reported.
On Wednesday morning, the offshore yuan plunged to a record low of 7.2674, before rebounding slightly later in the day. Later, on Thursday, it again slumped to 7.189 per dollar.
In recent months, China's economy has faced a downfall due to extensive COVID-19 lockdowns, droughts, and poor performance of the indebted property market.
The Chinese economy, under the leadership of Chairman Xi Jinping, narrowly avoided contraction in the second quarter, with gross domestic product (GDP) expanding just 0.4 percent on year during the April-June period.
On Thursday, China Foreign Exchange Market Self-Regulatory Framework (SRF) held a virtual conference to analyze recent developments in the foreign exchange market and to make arrangements for strengthening self-regulatory management.
Liu Guoqiang, Deputy Governor of the People's Bank of China (PBC) and Chair of the China Foreign Exchange Committee (CFXC), attended and addressed the conference.
It was noted at the conference that since the beginning of 2022, the RMB exchange rate has remained basically stable at an adaptive and equilibrium level. The CFETS RMB exchange rate index was generally on par with that at end-2021.
"Despite its depreciation against the US dollar, the RMB weakened by only half the USD appreciation rate of the same period. It strengthened markedly against the Euro, British pound, and Japanese yen, being one of the few strong currencies in the world," the statement read.
It was stressed at the conference that the foreign exchange market is of overwhelming importance, and it is a top priority to maintain its stability. There is a solid foundation for the basic stability of RMB exchange rate.
"The foreign exchange market is a big deal. Maintaining stability is the first priority," the PBOC said in a statement published on its website on Wednesday. "The People's Bank of China has accumulated rich experience in coping with external shocks [to the yuan market] and can effectively manage market expectations."
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