Chinese Yuan

yuan: In anticipation of a rate hike by the Federal Reserve in December, the US dollar index recently surged to its highest level since March, according to Global Times China. Against such a backdrop, all other major currencies have moved lower, not just the Chinese yuan. However, there is no cause for concern that the Chinese yuan is embarking on a one-way street of devaluation, given that the fundamentals of the Chinese economy are sound and the internationalization of the yuan has been steadily moving forward. But it is noteworthy that while the yuan exchange rate against the dollar has reached its lowest in six years, it is gaining value against other currencies. The Chinese currency has in the past experienced a long period of stable exchange rates and China reform to make its exchange rate mechanism more market-oriented will probably mean higher volatility for the yuan. According to a Bloomberg report on October 17, the yuan slumped 0.8 percent against the greenback but rose 0.6 percent against a trade-weighted currency basket during the same period, registering its biggest advance in three months. (news.financializer.com). As reported in the news.