The annual fall of the yuan will be the strongest in 20 years

The annual fall of the yuan will be the strongest in 20 years


Moscow. December 30. The yuan exchange rate against the dollar on Wednesday fell to its lowest level in almost five years as investors remained concerned about the deceleration of the Chinese economy and a possible strengthening of capital flight, says the Agency Bloomberg. YTD the yuan has fallen in Shanghai is 4.4%, the worst result in more than 20 years.

The so-called offshore yuan (auctions which are held outside mainland China) declined in Hong Kong to the lowest level since January 2011 (6,5970 yuan/$1) after the Bank of China on Wednesday set a reference rate of the national currency at the lowest level since may 2011 – 6,4895 yuan/$1.

Spot exchange rate of the yuan at auction in Shanghai fell less than 0.1 percent, to 6,4903 yuan/$1, its lowest level since may 2011.

Since the beginning of 2015 the Renminbi fell by 4.4% in Shanghai, which is the worst result for more than two decades, and by 5.2% in Hong Kong.

Economists surveyed by Bloomberg on average expect the weakening of the yuan by another 3.1% in Shanghai in 2016.

According to sources Bloomberg, Chinese authorities temporarily banned at least two foreign banks to carry out cross-border transactions with RMB. We are talking about the suspension until the end of March. Due to the increasing spread between the rates of the yuan is becoming cheaper to buy it in Hong Kong and sell in Shanghai.

As reported, on January 4, the Chinese foreign exchange trading system (CFETS) will extend the trading session for the yuan in Shanghai twice. Trading session starting at 9:30 local time and will close at 23:30 local time. Currently session to trade in the yuan in Shanghai closes at 16:30 local time.

The extension of the trading session will support the efforts of the Chinese authorities in terms of globalization of the yuan after the inclusion of the national currency to the basket of special drawing rights (SDR, SDR) of the International monetary Fund (IMF), experts say.