Currencies29159
Market Cap$ 2.53T+0.37%
24h Spot Volume$ 24.62B-1.94%
DominanceBTC51.45%-0.54%ETH16.88%+1.60%
ETH Gas4 Gwei
Cryptorank
MainNewsChinese Busi...

Chinese Businesses Hoard US Dollars Fearing the Yuan Could Weaken


Chinese Businesses Hoard US Dollars Fearing the Yuan Could Weaken
May, 08, 2024
2 min read
by Watcher.Guru
Chinese Businesses Hoard US Dollars Fearing the Yuan Could Weaken

President Xi Jinping is trying to counter the US dollar on the global stage by pushing the Chinese yuan ahead for cross-border transactions. Jinping wants the Chinese yuan to dominate the global trade sector and push the US dollar second in line. While that’s the agenda of the President, multinational corporations in China are not buying into the idea.

Also Read: U.S. Oil and Gas Production Shatters Records in 2024

Leading businesses in China are not convinced with the ideology, as they fear incurring losses. The yuan has already shed 1.9% of its value against the US dollar in 2024 alone. The Chinese yuan is dipping against the US dollar and is now at a 5-month low.

Estimates forecast it could fall further making the currency enter dangerous waters. Therefore, keeping more yuan and less of dollars will severely impact businesses leading to losses or even job cuts.

Also Read: When Will Gold Prices Reach $3,000?

Chinese businesses are parking their dollars offshore in deposits that earn them 6% returns. The yield is higher compared to 1.5% on yuan deposits in the homeland, and are waiting for better exchange rates. The development indicates that even China’s businesses don’t want the Chinese yuan as the risk of a crash remains higher.

A financial analyst explained that hoarding dollars offshore will continue among top businesses in China as returns are better. “This huge positive yield spread is not evaporating anytime soon,” said Alvin Tan, Head of Asia FX Strategy at RBC Capital Markets to Reuters.

Also Read: Commodity Market: Copper Prices To Rise 50% & Reach $15,000?

Chinese Businesses Hoard US Dollars, Fear the Yuan Leads To Losses

us dollar chinese china yuan currency bills brics
Source: iStock

Top import and export businesses in China are hoarding the US dollars because they expect their own currency to weaken. The fear stems from a market that remains on the razor’s edge and feeble economic growth after the COVID-19 era. The latest data from the People’s Bank of China (PBOC) shows that foreign exchange deposits surged by $53.7 billion since September 2023 touching $832.6 billion in Q1 of 2024.

Read the article at Watcher.Guru

Read More

BRICS: HSBC Predicts How Long US Dollar Will Remain Global Currency

BRICS: HSBC Predicts How Long US Dollar Will Remain Global Currency

Leading global bank HSBC has predicted the future of the US dollar forecasting how lo...
Jun, 15, 2024
2 min read
by Watcher.Guru
BRICS: Russia Central Bank Ditches US Dollar For Chinese Yuan

BRICS: Russia Central Bank Ditches US Dollar For Chinese Yuan

BRICS’ Russia is ditching the US Dollar in favor of the Chinese Yuan for trade, accor...
Jun, 15, 2024
2 min read
by Watcher.Guru
MainNewsChinese Busi...

Chinese Businesses Hoard US Dollars Fearing the Yuan Could Weaken


Chinese Businesses Hoard US Dollars Fearing the Yuan Could Weaken
May, 08, 2024
2 min read
by Watcher.Guru
Chinese Businesses Hoard US Dollars Fearing the Yuan Could Weaken

President Xi Jinping is trying to counter the US dollar on the global stage by pushing the Chinese yuan ahead for cross-border transactions. Jinping wants the Chinese yuan to dominate the global trade sector and push the US dollar second in line. While that’s the agenda of the President, multinational corporations in China are not buying into the idea.

Also Read: U.S. Oil and Gas Production Shatters Records in 2024

Leading businesses in China are not convinced with the ideology, as they fear incurring losses. The yuan has already shed 1.9% of its value against the US dollar in 2024 alone. The Chinese yuan is dipping against the US dollar and is now at a 5-month low.

Estimates forecast it could fall further making the currency enter dangerous waters. Therefore, keeping more yuan and less of dollars will severely impact businesses leading to losses or even job cuts.

Also Read: When Will Gold Prices Reach $3,000?

Chinese businesses are parking their dollars offshore in deposits that earn them 6% returns. The yield is higher compared to 1.5% on yuan deposits in the homeland, and are waiting for better exchange rates. The development indicates that even China’s businesses don’t want the Chinese yuan as the risk of a crash remains higher.

A financial analyst explained that hoarding dollars offshore will continue among top businesses in China as returns are better. “This huge positive yield spread is not evaporating anytime soon,” said Alvin Tan, Head of Asia FX Strategy at RBC Capital Markets to Reuters.

Also Read: Commodity Market: Copper Prices To Rise 50% & Reach $15,000?

Chinese Businesses Hoard US Dollars, Fear the Yuan Leads To Losses

us dollar chinese china yuan currency bills brics
Source: iStock

Top import and export businesses in China are hoarding the US dollars because they expect their own currency to weaken. The fear stems from a market that remains on the razor’s edge and feeble economic growth after the COVID-19 era. The latest data from the People’s Bank of China (PBOC) shows that foreign exchange deposits surged by $53.7 billion since September 2023 touching $832.6 billion in Q1 of 2024.

Read the article at Watcher.Guru

Read More

BRICS: HSBC Predicts How Long US Dollar Will Remain Global Currency

BRICS: HSBC Predicts How Long US Dollar Will Remain Global Currency

Leading global bank HSBC has predicted the future of the US dollar forecasting how lo...
Jun, 15, 2024
2 min read
by Watcher.Guru
BRICS: Russia Central Bank Ditches US Dollar For Chinese Yuan

BRICS: Russia Central Bank Ditches US Dollar For Chinese Yuan

BRICS’ Russia is ditching the US Dollar in favor of the Chinese Yuan for trade, accor...
Jun, 15, 2024
2 min read
by Watcher.Guru