Opinion: Will U.S. Rate Hikes Send Chinese Stocks and Bonds Tumbling?

The yuan started to depreciate against the U.S. dollar in March. Compared to the two short rounds of depreciation in 2021, the new twist to the depreciation this time is that the CFETS RMB Index — which measures the value of the yuan against a basket of 24 currencies including the U.S. dollar and the euro — has fallen about 2.4% since its March high. Historically, when there was a significant drop in the exchange rate against the basket, the depreciation of the yuan against the U.S. dollar was unlikely to end soon.