China’s Yuan Joins Ranks of World’s Most Influential Currencies
- Currency punches above its weight in investors’ attention
- Yuan seen pivotal as gauge of state of U.S.-China tensions
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When the offshore yuan matched its record low last week, it served notice that China’s exchange-rate fixing had returned as a key variable to participants in the $6.5 trillion-a-day global foreign-exchange market.
With Sino-American tensions on the rise again, China’s appetite to allow significant drops in the yuan will affect the day-to-day moves of a whole raft of other currencies. While correlation is lacking over longer periods, last Wednesday showcased the kind of spot impact the yuan can have for others. The offshore yuan slid 0.7% at one point against the dollar in wake of the bilateral flare-up over Hong Kong. Australia’s dollar dropped as much as 1.3%, while the Colombian peso saw a 1.4% drop.