China’s Yuan Erases 2024 Losses Amid Broad Dollar Weakness

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One-hundred yuan banknotes. Photo: Bloomberg

(Bloomberg) — China’s onshore yuan erased its year-to-date losses amid bets capital will flow back to the country as the dollar weakens.

The currency rose as much as 0.5% to 7.0905 per dollar on Thursday, a level unseen since December. With the Federal Reserve expected to start cutting interest rates next month, some investors see Chinese corporates repatriating their foreign-exchange holdings to the domestic market, bolstering the yuan.

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China's onshore yuan rose 0.5% to 7.0905 per dollar, negating year-to-date losses as the dollar weakened.
Investors anticipate Chinese firms will repatriate foreign-exchange holdings due to expected Federal Reserve rate cuts.
Analysts suggest the yuan could strengthen further with heavy dollar selling and exporters' behavior potentially driving additional appreciation.

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Who’s Who

Australia & New Zealand Banking Group Ltd.: Australia & New Zealand Banking Group Ltd. (ANZ) is referenced in the article through Khoon Goh, its head of Asia research. Goh noted the potential for further yuan appreciation if exporter behavior aligns, particularly if the yuan breaks the 7.10 level per dollar.

Eurizon SLJ Capital Ltd.: Eurizon SLJ Capital Ltd. is a financial company mentioned in the article where its chief executive, Stephen Jen, suggested that Chinese companies might sell up to $1 trillion in dollar-denominated assets as U.S. interest rates are cut. This action could potentially strengthen the yuan by up to 10%.

Barclays Bank PLC: Barclays Bank PLC is referenced in the article through a statement by Lemon Zhang, a strategist at the bank. Zhang indicated that a sustained fall through the 7.10 level could encourage more conversion flows if exporters believe that the dollar-yuan exchange rate has peaked in the short term.

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