The drop of the dollar is pushing China to weaken the yuan's strength after months of its support

The ongoing decline in the Chinese People’s Bank has led to a change in its currency management as it comes from the Yuan support to try to reduce the risk of rapid rise. The Chinese Central Bank this week determined the yuan’s daily references to the yuan at a slightly weaker level of market expectations, after it has set the price at stronger levels over the past six months. The bank is also preparing to stop selling bonds in Hong Kong for the third consecutive month, which has been the longest interruption since 2018, which keeps the liquidity plentiful and reduces pressure on the yuan. In addition, over the past few weeks, customers have monitored the banks that buy the dollar in the local market in an effort to delay the rate of Chinese currencies. This shift by the Chinese People’s Bank is the latest example of how the dollar affecting the global financial markets affects, as other central banks have begun to support and prepare their currencies to follow more facilitating policies to increase growth. In the case of China, the authorities must deal with caution, as the weak yuan can sharply lead to the displacement of capital, while its rapid height may harm exports. “Local conditions in China are not ready to carry a significant increase in the value of the yuan. We still believe that the yuan will remain behind the currency basket, despite the weakness of the dollar and the talk about reducing dependence.” The commercial ceasefire between Beijing and Washington has contributed to the support of the Chinese currency, as the Yuan has risen by more than 2% against the dollar since scoring the lowest level in 18 years in April. This height enabled the People’s Bank to reduce its defense of the currency. In this context, the bank did not refrain from issuing bonds in Hong Kong, and according to the “Bloomberg” accounts, the tools that resolved their right in the three months may have pumped about 85 billion yuan (equivalent to $ 11.8 billion) in the market, which helped keep the financing costs for a month on the Yuan at 4,7%, in January, in January, The place to visit the bank in the bank. The speculators over currency finishes. Government support position confirms the latest economic data, the need to prevent the yuan from raising very quickly. Despite the resilience of exports, the constant shrinking of prices and poor local consumption emphasizes the need for government support. Analysts say Chinese officials are unlikely to stand the spectator if the yuan continues with the rapid increase, similar to what happened recently to the Taiwan and South Korea operations. “With the return of the US dollar sale wave, the Chinese bank is likely to move with caution to avoid excessive increase in the value of the yuan, as it can constitute the export of China’s exports in the Customs War.”