Nov 29, 2021 07:48 PM

Opinion: Why Yuan Is Likely to Stay Strong for a Long Time

Photo: VCG
Photo: VCG

In 2021, the yuan has continued to appreciate against the U.S. dollar, with the exchange rate rising from nearly 7 per dollar at the beginning of the year to around 6.4 now, an increase of about 2%.

The appreciation alone is not significant, but it is exceptional in two aspects. First, the U.S. dollar index has strengthened this year, rising by around 4.5%, which means the Chinese currency has appreciated even more against other major currencies. Second, the Chinese and U.S. economies have diverged significantly this year. The official manufacturing purchasing managers index (PMI) in China has fallen below 50 over the past two months, nearing the lowest level in the past decade, while the recent readings in the U.S. were still as high as 60.

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