China’s cascade of economic support measures spurs yuan buying
CHINA’S yuan is set for its longest run of gains in a month after policymakers announced a raft of new measures to support the Covid-battered economy.
The offshore yuan advanced 0.4 per cent to 6.8591 per dollar, extending its four-day advance to nearly 1 per cent. The currency also rallied past its 200-day moving average for the first time since April, making room for further appreciation.
The currency jumped some 7 per cent since October 25, when it hit the weakest level on record amid concerns China’s strict Covid Zero policy would stifle the economy. Since then, Beijing abruptly loosened its virus curbs, and doubled down on its efforts to shore up growth by injecting liquidity and aiding the property sector.
The yuan’s strength has supported regional risk sentiment, with the Australian dollar and Korean won also gaining in the last two months.
“We mark our year-end target to 6.68, with the majority of the appreciation concentrated in the first quarter,” Galvin Chia, a strategist at NatWest Group wrote in a note, referring to the offshore yuan. The currency “will likely recouple directionally with the dollar and global currency movements.”
The People’s Bank of China and the nation’s banking regulator said Thursday that they will allow lower mortgage rates for first-home buyers if newly constructed house prices drop for three consecutive months. China is also said to be planning to relax restrictions on developer borrowing, dialing back the stringent “three red lines” policy.
The onshore yuan gained as much as 0.5 per cent to 6.8504, the strongest level since August. BLOOMBERG
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