Buoyed by a weaker US dollar and quick recovery of China’s economy after the coronavirus outbreak, in the current week the Chinese yuan (renminbi) hit its strongest level against the greenback since May 2019.
The onshore and offshore Chinese yuan both extended weekly gains against the dollar on Friday. In one week, the renminbi rose around one percent, from levels above 6.83 against the greenback to the present rate of 6.75.
If the yuan continues to advance against the dollar, or at least doesn’t give up its latest gains, it might become the best performer among its Asian peers. Spiking over four percent from the end of the June quarter, the renminbi is headed for the highest quarterly gain on record, as per Bloomberg data.
The Chinese currency could further advance against the US dollar in line with various outlooks. The Goldman Sachs anticipates the onshore yuan to strengthen to 6.5 per dollar in one year, while analysts from JP Morgan believe the yuan may have “more catch-up to go.”
“As the dollar has entered this dollar depreciation, this weaker dollar environment, the (yuan) has somewhat lagged,” Alex Wolf, head of investment strategy for Asia at JP Morgan Private Bank, told CNBC.
While far from the two year-lows seen at the beginning of September, the dollar continued to face losses in the week. The dollar index, which tracks the greenback against a basket of currencies, slipped to 92.83 on Friday, from above 93.33 on September 11.
China has developed into one of the few major economies which managed to avoid falling into recession during the coronavirus crisis. the rising exports for several consecutive months, gave another boost to the Chinese economy and its national currency, analysts believe.