China’s Yuan Hits 6 Month High

China’s renminbi hit a six-month peak this week, extending a rally that it began in May following a sharp selloff earlier this year.

The currency gained 2 percent against the greenback since hitting a 19-month trough of 6.2669 on April 30. While the yuan remains down over 1 percent year-to-date, experts say it has more room to appreciate as long as the People’s Bank of China refrains from intervening.

“Obviously, the yuan won’t be totally immune to dollar strength, but for now, it seems that strong [economic] fundamentals are dominating. We’ve seen the dollar index rising strongly but that hasn’t translated to weakness for the renminbi yet,” said Khoon Goh, senior foreign exchange strategist at Australia New Zealand Bank.

“Since May, the People’s Bank of China has stepped away from markets. Because of their quietness, investors have been focusing on foreign-direct investment, the country’s strong trade balance and portfolio flows,” Goh said.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza