The Chinese yuan has been watching its tight end for almost three months, as a call between Present Xi Jinping and his U.S. counterpart raised hopes of improved relations between the two nations.
China's currency has risen 0.2% to $ 6,4446, set at the strongest closing rate since June 16. The most profitable report was a report that Xi spoke to US President Joe Biden on Thursday night, during which the two countries vowed to hold normal communications. , although the American leader has expressed his frustration over recent death talks.
The rally could push the yuan out of the small 1.3% belt it had been wearing since mid-June. China's currency remains strong, despite the rise of Covid lawsuits and Beijing attacks on major technology companies in the country, due to the authorities' cautious approach to policy cuts and inflows into maritime markets.
"This statement should help improve the risk situation in the short term," said Zhou Hao, an economist at Commerzbank (DE: CBKG) AG (OTC: CRZBY). In the near future, "whether the yuan will continue to depend on the movement of the dollar."
Xi said during the speech China-U.S. bonds should return to normal, according to Chinese media. The call was the second between the leaders and is coming as the relationship is becoming increasingly controversial. The conversation was started by Biden after meetings involving his Cabinet officials and Chinese counterparts in recent months have been fruitless.
The yuan onshore trading gains of 0.13% strengthened at 6.4475 from 12:02 pm. in Shanghai, while maritime revenue increased by 0.14%. Some major Chinese banks bought the dollar after the yuan jumped between the headlines on the phone, which helped ease the meeting, according to traders. They asked for anonymity as they were not authorized to speak to the media.
The yuan has not moved at all since the beginning of June, after a 1.5% jump in the second quarter during the fall. One month yuan onshore suggested a four-day slowdown to a minimum of more than two years, suggesting that traders expect the currency to remain stable.
Calmness in China's foreign exchange markets, however, could end as the yuan will be weakened by the depreciation of the central bank, according to Claudio Piron, head of Bank of America's (NYSE: BAC) head of exchange strategies and prices in Singapore. The price will drop to 6.60 by the end of the year, an unprecedented rate from the end of 2020, he added.
"Signs of a willingness to intervene in foreign negotiations in a very sensitive manner could be a positive benefit to the yuan and regional currencies," said Yanxi Tan, a foreign exchange strategist at Malayan Banking Bhd. Singapore. But the area of continuous progress "could have been blocked without a more comprehensible interpretation of policy changes."
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