Caixin View: China Feels Chill From Trouble in Turkey
On Monday, the People’s Bank of China (PBOC) set the yuan's central parity rate at 6.8629 to the U.S. dollar, the weakest in nearly 15 months and 0.34% weaker than Friday’s fixing. Financial turmoil in Turkey, another country in the midst of a trade row with the U.S., is likely part of the reason for the PBOC’s decision.
The Turkish lira is plunging, putting more pressure on the euro and increasing investors’ risk aversion to emerging market currencies across the board. This is adding to the dollar’s attraction as traders seek a safe haven. And as we’ve argued before, a stronger dollar is one of the main reasons for the yuan's recent slide.
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