Currencies Haved: Chinese Yuan

currencies haved: In anticipation of the 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 the other major currencies haved headed lower, including the Chinese yuan. However, there is no ground for concern that the Chinese yuan would embark on a one-way street of devaluation, given that the fundamentals of the Chinese economy are sound and the internationalization of the RMB has steadily moved forward. But it is noteworthy that while the RMB exchange rate against the dollar has reached the 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 see higher volatility for the yuan. According to a Bloomberg report dated Oct. 17, the yuan slumped 0.8 percent against the greenback last week 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.