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China's onshore yuan has advanced to its strongest level in over a year, erasing its year-to-date losses. This rally is attributed to a broad decline in the dollar and signs of corporate buying. The yuan's strength is further supported by exporters repatriating dollar holdings and the unwinding of short-yuan carry trades. Despite this, some analysts note that the yuan's movement against the dollar has been relatively stable throughout the year. The currency is performing strongly alongside Asia FX ex-Japan, with the yuan on track to close at 2024 highs.
As Michael Pettis noted last night, Bloomberg has a rather breathless headline celebrating the yuan's new strength ("Yuan Hits Strongest in Over a Year as Flows Offset Fundamentals") The boring reality: yuan just hasn't moved much v the dollar this year, period. 1/ https://t.co/j6VuJ3z38T
Yuan Hits Strongest in Over a Year as Flows Offset Fundamentals Currency gains as exporters repatriate dollar holdings Unwind of short-yuan carry trade also adds fuel to rally https://t.co/qw1IqHWUAD
China’s onshore yuan erased its year-to-date losses amid bets capital will flow back to the country as the dollar weakens. https://t.co/KtZfLjqKop
