China’s Yuan Is Propelling Emerging Currencies Like Never Before

The yuan’s relative resilience this year has also played a role in limiting fluctuations across emerging markets

(Bloomberg) — The Chinese yuan is having a greater impact on its emerging-market counterparts than ever before and may play a crucial role in determining their performance in the coming year.

The currency’s correlation with an MSCI Inc. index of its developing-nation peers rose to record in September on a weekly basis before edging back slightly amid the omicron outbreak, Bloomberg data show. While the close relationship is partly a result of China’s large weighting, it’s also been driven by the yuan’s links to the Brazilian real reaching the strongest since at least 2008, and that with India’s rupee touching a three-year high.