The strengthening of the Chinese yuan sends signals to U.S. and global investors

Amid ongoing U.S.-China strategic competition and the increasing geopolitical significance of monetary policy, the exchange rate of the Chinese yuan has continued to strengthen. For many years, especially during the Trump administration, Washington has accused China of currency manipulation, while Beijing has sought to demonstrate a responsible and predictable macroeconomic stance.

In this context, the exchange rate of the Chinese yuan has become not only an economic indicator but also a tool for conveying diplomatic policy signals — for both the U.S. government and global markets concerned with China's evolving role in the global financial system. The Financial Times noted in its commentary that the exchange rate of the Chinese yuan against the U.S. dollar has reached its highest level since Trump's election victory.

After years of weakness, the rebound in the Chinese yuan's exchange rate is seen as a signal that Beijing is preparing to gradually strengthen the yuan. The yuan has depreciated significantly against the U.S. dollar in recent years, but it has appreciated by 2.3% since the beginning of this year, reaching 7.14 yuan per U.S. dollar.

Analysts point out that the appreciation of the yuan may play an important role in trade agreement negotiations between Beijing and Washington. Although the yuan's performance lags behind currencies such as the euro and the Japanese yen (which have appreciated by 13.2% and 6.2%, respectively, against the U.S. dollar since the start of this year), the yuan has still seen an increase in value.

In recent years, China's trade surplus has rapidly increased, reaching 685.5 billion U.S. dollars in the first seven months of this year. Economists believe that this should support the exchange rate of the yuan. The total trade surplus for the whole of 2024 is expected to approach 1 trillion U.S. dollars, setting a new record. In addition, China has long been committed to expanding the international use of the yuan. Against the backdrop of fluctuations in the U.S. dollar, Beijing's stable and gradual policy of promoting the yuan's strength is a signal to global investors.

Original: www.toutiao.com/article/1842319299086348/

Statement: This article represents the views of the author himself.