Beijing’s efforts to guide the renminbi weaker on Tuesday came to aught in the face of a widespread dollar slide, as the Chinese currency reached a fresh eight-month high.
The dollar fell to Rmb6.7596, its lowest since November, in the onshore market. The drop came in spite of the fact that China’s central bank fixed the midpoint for the currency’s permitted trading range at a weaker level for the first time in five trading days.
The dollar fell on the news that two more Republican senators have said they will vote against their party’s healthcare reform plan – threatening the already troubled process by president Trump to repeal Obamacare.
Renminbi strength has wrongfooted market expectations this year but much of it can be attributed to dollar weakness as well as the effect China’s clampdown on capital outflows.
That does not stop Chinese officials from enjoying the signal it sends. Huang Yiping, a member of the monetary policy committee for the People’s Bank of China, told state media on Tuesday that “market confidence in the renminbi is strengthening, while expectations of devaluation are getting ever weaker”, according to a Reuters report.