SHANGHAI : Some Chinese companies are holding on to dollar revenues from exports, while others are turning to foreign exchange hedging in anticipation of a fall in the value of the yuan, according to executives, bankers and data analysed by Reuters.Several bankers in China told Reuters that clients are re
SHANGHAI : Some Chinese companies are holding on to dollar revenues from exports, while others are turning to foreign exchange hedging in anticipation of a fall in the value of the yuan, according to executives, bankers and data analysed by Reuters.
The moves are at odds with bank forecasts for a rising yuan in 2023 and broader market expectations that the U.S. dollar will fall this year, and could contribute to yuan weakness. Such moves are perhaps not surprising given yuan volatility since Beijing suddenly unwound its zero-COVID strategy. The currency hit six-month highs in January, before dropping close to the closely-watched 7 per dollar level.In response to faxed questions on the yuan weakening past 7 to the dollar, the People's Bank of China directed Reuters to comments by its governor Yi Gang who said the level is not a"psychological barrier".
Now the prospect of Chinese tourists using foreign exchange for their trips abroad, fresh concerns that U.S. interest rates might rise further and geopolitical tensions keeping investment flows away from China are all weighing on the currency. China on Sunday set a modest target for economic growth this year of around 5 per cent as it kicked off its annual parliamentary gathering. With the economy staging a steady recovery, this could put a floor under the yuan and ultimately attract inflows.
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