The Chinese yuan has depreciated against the US dollar to a new low in seven months. Institutions estimate that due to factors such as the drag of the real estate problem, investor market sentiment is low and capital is flowing out to seek other better returns. The yuan-to-dollar exchange rate hit a new low since mid-November last year. As of 10:00 am on the 21st, the onshore yuan-to-dollar spot exchange rate fell below 7.26 to 7.2607 at the lowest point; the offshore yuan-to-dollar spot exchange rate touched the lowest point of 7.2923, close to the 7.3 mark.
Pang Ming, chief economist for Greater China at Jones Lang LaSalle, analyzed the reasons for the depreciation of the yuan against the US dollar in a report by Xinhua News Agency. He said that this is a stage of pressure on the yuan against the US dollar, mainly due to the strengthening of the US dollar index caused by the divergence of monetary policies among major economies and the rising global risk aversion sentiment, bringing short-term pressure on the yuan.
Reuters reported that the depreciation of the yuan and the large-scale capital flow into Hong Kong and other situations show that Chinese investors are not optimistic about the market recovery, so they choose to invest in places with higher yields. Investors have almost exhausted their patience waiting for strong policy measures after the official launch of stimulus measures to support the real estate industry.
The report quoted analysts as saying that Hong Kong’s yuan deposit reserves have increased. The latest official data in April shows that yuan deposits are 1.09 trillion yuan (about 4.9 trillion New Taiwan dollars), close to the peak in January 2022; This shows that Chinese investors are using their limited offshore investment channels to seek higher returns.
Analysts mentioned that Chinese investors also have reasons to pause at present, including waiting for the People’s Bank of China’s attitude towards easing interest rates; The Third Plenary Session of the 19th CPC Central Committee will be held in July. Investors can wait until the economic, fiscal and other policies are determined.