Yuan strengthens amid US-China relations thaw, weaker dollar

Yuan strengthens amid US-China relations thaw, weaker dollar

 
USD/CNY
-0.15%

The Chinese Yuan is gaining strength, partly due to a softer US Dollar and improving diplomatic ties between the United States and China. Analysts from Commerzbank (ETR:CBKG) have indicated that while a retreating Dollar could bolster the Yuan's value, the currency pair is unlikely to fall below the 7-to-USD threshold soon.

China is taking assertive steps to bolster its housing market and assist property developers with their financing needs. This move also aims to tackle local government debt challenges and enhance infrastructure investment. These measures are designed to ensure a stable growth trajectory for the economy by focusing on stabilization rather than rapid expansion.

However, diverging monetary policies between the Federal Reserve (Fed) and the People's Bank of China (PBoC) are expected to sustain the existing interest rate differences between the two nations. This situation continues to play a significant role in the dynamics of the Yuan compared to the Dollar.

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