The Chinese yuan breaks the mark of seven units per dollar and ends at a 26-month low

By: News Team

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The Chinese yuan topped 7 per dollar on Friday for the first time in two years, pressured by a rise in the U.S. currency and market expectations of an even more aggressive hike in interest rates. Federal Reserve interest.

The yuan on the local market ended the session at 7.0166 per dollar, down nearly 0.3% on the day and the weakest close since July 14, 2020.

The overseas currency was trading at 7.0316 yuan per dollar at 0830 GMT.

Friday marked the third time the tightly controlled yuan has broken the 7 mark since the 2008 global financial crisis. In the past, authorities have been quick to intervene in the market to defend it.

Crossing the level could stoke fears of capital outflows, just as authorities want to gather resources to revive an economy reeling from COVID-19 outbreaks and a deepening housing crisis.

Before the market opening, the People’s Bank of China (PBOC) pegged the yuan’s average exchange rate at 6.9305 per dollar, or 0.3% weaker than the previous time.

The sizable pullback in Friday’s fixing indicates the central bank may have allowed the yuan to cross the 7-7 mark, said Ken Cheung, chief Asian currency strategist at Mizuho (TYO: 8411 ) Bank.

“As long as the pace of depreciation isn’t too fast and it stays under control, it should be fine.”

Several currency traders said they now see 7.1-7.2 per dollar as the next target, while 7 has become a resistance level as the broad dollar strength should continue to weigh on most currencies. emerging market currencies.

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