China’s Renminbi rises high while it’s economy flourishes from the depths of pandemic stricken global economy.
Yuan Rises to 31 Month High Against USD
China’s currency strengthens to two years high against the US Dollar and the rest of the major currencies. Accordingly, a dollar is worth 6.47 renminbi which is quite strong compared to last year’s 7.16 renminbi. Even though the renminbi’s rise may not ease the tension between the US and China, it certainly will help Mr Joe Biden.
Reasons For The Rise in China’s Currency
One of the critical reasons for this trend is the fully charged working of China’s factories. Along with that, the shopper’s are locked down with nowhere to go, thus, buying Chinese made goods for nesting. Owing to the Coronavirus pandemic, China’s exports rose to 14.3% in September. Also, due to the strong economic rebound, the investors are investing in China or investments linked to renminbi.
Renminbi’s High Rise Benefits Hong Kong and Europe
The renminbi’s strengthing will have an impact on Hong Kong’s market. Initially, as the Yuan saw a growth, Hong Kong market gained over 11%. Also, in the European markets, MSCI Europe Apparel and Luxury Goods Index rose by 3%. Most significantly, German exports will increase phenomenally as China already consumes 7% of its exports. Furthermore, China being the largest consumer of copper and gold is all set to benefit its European counterparts.
Yuan Replaces USD in Greater Bay Area
The People’s Bank of China (PBOC), the Guangzhou branch confirm that transactions worth 17.2 trillion Renminbi were cleared in the excellent bay zone last year. The Zone involves Hong Kong, Macau and nine mainland cities from China. Also, previous year cross border electronic billing was made feasible. The move resulted in easing the lives of the 70 million people living in the Zone.
In all, China’s economic growth along with the strengthening of Yuan seems under control as of now. However, the long term global impact of this rise is uncertain.