Connect with us

Hi, what are you looking for?


China state financial media warn of two-way volatility for yuan this year

SHANGHAI — Investors should avoid Chinese currency risk and adapt to higher foreign exchange volatility, three state financial newspapers in Shanghai and Beijing said in front-page commentaries on Tuesday after more than a week of strong gains by the yuan.

The currency may have strengthened, but this year it would be volatile in both directions, they warned.

Since the newspapers delivered essentially the same message on the same day and on their front pages, they had almost certainly been directed to do so by the government.

The yuan has strengthened 2.2% against the dollar this year, hitting an almost five-month high on Tuesday and reversing much of 2022’s annual loss, the biggest in 28 years. Optimism over economic recovery following the country’s ending of pandemic controls in late November and early December has driven the currency.

“Even if the depreciation pressure has diminished, two-way volatility in the yuan exchange rate will still be the norm in 2023,” the Securities Times said.

“The shrinking current account surplus and yield gap between China and the United States will keep adding depreciation pressure on the yuan,” it warned.

That newspaper, from Beijing, and the two others urged investors to adopt risk neutrality in foreign exchange.

The US Federal Reserve’s raising of interest rates and the resulting strength of the dollar was a key factor weighing on the yuan in 2022, since higher US yields attracted money to dollar-denominated assets.

Markets widely expect the US central bank to continue hiking interest rates at its next few meetings until it is sure that inflation has peaked.

The China Securities Journal of Beijing said improvements in China’s economic expectations remained the most fundamental force in deciding the yuan’s value.

“After a reasonable correction, the yuan will likely continue to be subject to two-way volatility, gradually converging towards a reasonable range in the long run,” the newspaper said.

The Shanghai Securities News said the value of yuan would be determined mainly by domestic factors this year. The pace of improvements in economic fundamentals would become the focus.

Recent economic indicators, including December factory activity, have suggested that surging COVID-19 infections following the removal of social restrictions disrupted production in December and weighed on demand.

Many investment banks, including Nomura and JPMorgan, have downgraded their estimates for Chinese gross domestic product for the fourth quarter and 2022. — Reuters

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!


Editor’s Pick

<?xml encoding=”utf-8″ ??> The exodus of workers from the jobs market over the pandemic has weakened prospects for Britain’s economic growth, the governor of...

Editor’s Pick

<?xml encoding=”utf-8″ ??> Will Polston, talks to Business Matters about how helping ambitious owners to maximise their potential has resulted in him becoming a finalist...


Elon Musk talks about his company’s Starlink project at the Mobile World Congress, Barcelona, Spain, June 30, 2021. — BRISA PALOMAR / PACIFIC PRESS/SIPA...


PHILSTAR FILE PHOTO The National Economic and Development Authority (NEDA) has approved seven “high-impact” projects, ranging from agriculture to transportation, the agency’s top official...


Television (TV) advertising is shifting toward addressable TV, a service that allows advertisers to show different ads to different audiences watching the same program,...

Editor’s Pick

<?xml encoding=”utf-8″ ??> Wayne Janse Van Rensburg, Chief Executive of education company Learndirect talks to Business Matters about the inspiration behind their business, which...

You May Also Like


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.