China’s RMB exchange rate against the US dollar hits a three-year high

The exchange rate of China’s currency against the U.S. dollar has reached its highest level in three years. This poses a challenge for Beijing as China tries to balance its export demand with soaring commodity prices.

Onshore traded yuan rose 0.2% on Tuesday to 6.4052 yuan per dollar, the highest since June 2018. At the same time, the Shanghai and Shenzhen 300 Index of China’s Shanghai and Shenzhen 300 Index also set its best closing price since July, up 3.2%. Minute.

In the past year, the appreciation of the renminbi has exceeded 10%. China’s economic rebound From the coronavirus pandemic, foreign funds flowed into the country.

However, for Chinese policymakers, the appreciation of the renminbi is a problem. They are struggling to cope with rising commodity prices, the risk of asset bubbles and signs that growth may be losing momentum.Quarterly gross domestic product Only increased by 0.6% In the first three months, it was much lower than expected.

“This [People’s Bank of China] Aware of the risk of RMB appreciation in China [slowing] The growth momentum was strong in the first quarter. “Zhang Jianren, chief Asian foreign exchange strategist at Mizuho Bank, said. He added that capital inflows may exacerbate asset price inflation and render the central bank’s attempts to stabilize leverage “ineffective.”

In recent days, the People’s Bank of China has issued mixed messages about the country’s currency. In an editorial that was deleted on Friday, one of its officials stated that the central bank should allow the yuan to appreciate in response to rising commodity prices.

Liu Guoqiang, deputy governor of the People’s Bank of China, subsequently stated that he expected the exchange rate to be “stable” and driven by supply and demand and international market conditions.

Beijing is already concerned about rising commodity prices. In April, commodity prices pushed Chinese factory factory prices to their highest level in three years, increasing the possibility of consumer price increases.

Driven by strong gains in consumer staples and financial stocks, the rise of the Shanghai and Shenzhen 300 Index on Tuesday brought the index to its highest level since March.

After the government’s new crackdown on the renminbi, comments on the renminbi followed, which exacerbated the extreme volatility in its transactions last week.

After the record was set in early May, Iron ore price Beijing fell on Monday after warning of “excessive speculation,” and said it would stop product hoarding and monopoly. The State Council of China, chaired by Premier Li Keqiang, said last week that measures should be taken to prevent producer prices from penetrating consumer prices.

The appreciation of the renminbi will lower the price at which the country’s industrial producers buy raw materials, but it usually hurts its exporters. Driven by strong industrial production and exports, the country’s GDP growth returned to the pre-pandemic rate in the fourth quarter, although domestic consumption lags behind the broader recovery.

After the relaxation of major lending rates last year, policy makers remained highly vigilant against the risk of asset bubbles.Guo Shuqing, China’s top banking regulator earlier this year Warns of the risk of bubbles in the international market And China’s real estate industry.

Interest rates have not yet increased, but signs are gradually appearing Tightening credit conditions domestic.

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