Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

China

Chinese yuan hits highest level against dollar in 16 months due to stimulus policies, US Fed rate cut: experts

2024-09-26 11:15 Last Updated At：09-27 00:37

The offshore Chinese currency yuan briefly rallied past the 7.0 per dollar milestone for the first time in 16 months on Wednesday, as investors digested China's stimulus measures to stabilize growth and the recent U.S. Fed rate cut kept the dollar on the back-foot.

China's central bank governor Pan Gongsheng Tuesday said that the country will cut the reserve requirement ratio (RRR) by 0.5 percentage point in the near future, providing about 1 trillion yuan (about 142.30 billion U.S. dollars) in long-term liquidity to the financial market.

Depending on the liquidity situation in the market, the RRR may be further lowered by 0.25 to 0.5 percentage point within the year, Pan told a press conference in Beijing.

Meanwhile, the U.S. Federal Reserve announced last week that it will slash the target range for the federal funds rate by 50 basis points, marking the first rate cut since March 2020 and signaling the start of a monetary policy easing cycle.

"On the one hand, as U.S. Federal Reserve kicked off a monetary policy easing cycle, the interest rate difference between the Chinese and U.S. currencies narrowed. On the other, the resilience of China's foreign trade and its high trade surplus have helped stabilize the Chinese yuan exchange rate. The recent introduction of a host of policies to stabilize growth has also significantly boosted market confidence," said Wen Bin, chief economist at the Beijing-based China Minsheng Bank.

Recently, the supply and demand of the foreign exchange market have become more balanced. Data released by the State Administration of Foreign Exchange showed that in August, the cross-border income and expenditure volume of enterprises, individuals and other non-bank sectors has changed from a deficit previously to a surplus of 15.3 billion U.S. dollars.

"The appeal of Chinese yuan assets has increased dramatically, attracting the inflow of overseas capital, and further promoting steady performance and gradual improvement of the Chinese yuan exchange rate. We have every reason to believe that with the continued support of policies and the fundamentals of the economy, the Chinese yuan exchange rate can stay in a balanced range and perform well," said Tian Lihui, director of the Institute of Finance and Development at the Nankai University in north China's Tianjin Municipality.

Death toll from Venezuela earthquakes rises to 920

The death toll from the powerful twin earthquakes that struck Venezuela on Wednesday had risen to 920, with 3,360 others injured, Venezuelan National Assembly President Jorge Rodriguez said on Friday.

Another 172 people still remained trapped under debris and 3,007 others had been displaced by the disaster, Rodriguez said.

The earthquakes damaged 383 buildings, including 13 hospitals and 25 commercial centers, he said, adding that another 1,002 facilities sustained varying degrees of damage.

As of Friday afternoon, 871 international rescue workers had arrived in the country to assist in relief operations, Rodriguez said.

Meanwhile, as of midday Friday, over 50,000 people remained missing, according to a website established to receive reports of people still unaccounted for. Venezuela's acting president Delcy Rodriguez said Friday that La Guaira state, one of the worst-hit areas, had been placed under military control to facilitate rescue efforts and ensure security.

Health Minister Carlos Alvarado said that over 5,000 medical workers have been urgently mobilized nationwide to fully engage in the earthquake relief efforts, and in La Guaira state, the military has set up a field hospital to help ease local medical capacity pressures.

The Chinese embassy in Venezuela confirmed that seven Chinese citizens were among those killed in the earthquakes.

Search and rescuers are racing to reach survivors beneath the rubble before the “golden” window of time closes, and families are waiting desperately for news.