As the dollar has weakened, so has the price of the currency, with the yuan gaining in value against the dollar and gold.
With the yuan’s recent gains, there are now more currencies in circulation than at any time since 2008.
The Shanghai Composite Index rose more than 1% in the second quarter, while the Hong Kong Stock Exchange rose 2%.
The People’s Bank of China has also announced a yuan-denominated futures contract, making it easier for Chinese investors to trade the currency with the U.S. dollar.
This week, China’s central bank announced it would allow the yuan to trade with the dollar in its exchange rate, and it has since moved the yuan exchange rate in the other direction, to the greenback.
So why the sudden and sudden surge in the currency?
According to Bloomberg, there is a strong relationship between the yuan and oil prices.
Oil is a major component of China’s economy and the government has repeatedly raised the yuan in response to economic troubles.
However, it’s not just the yuan that has been gaining value.
Last year, China had a trade surplus with the United States of $1.2 trillion, but that figure was $1 trillion lower than it is now.
At the same time, the U to U. S. trade deficit was $9.4 trillion, which has ballooned to $19.6 trillion.
As the dollar’s value has plummeted, the yuan has risen against the U, making imports more expensive.
Inflation has also risen dramatically.
Since the yuan became the world’s second-largest currency in 2016, it has fallen against the US dollar, losing $1,500 to $1 in 2017 and $1 to $2 in 2018.
China has also been working to bring down its currency.
For instance, it reduced the purchasing power of the renminbi in 2018 and has since eased restrictions on foreign purchases.
But there are also fears that the yuan could slide even further against the greenbacks if the government does not take other steps to bring the currency back into line with its trading partners.
One thing is for sure, the Chinese government is watching the dollar closely.
When it comes to foreign exchange, the country has been known to be very tight-lipped about its exchange rates.
There are reports that China’s government is concerned about how the yuan will perform in the months ahead.
What are your thoughts on China’s yuan and the global economy?
Do you think the yuan should be devalued or remain unchanged?
Be sure to let us know in the comments below!
Want to learn more about China and the world?
Read the new book The China Economy and the World by the President of the World, John Bolton, a book about how China and other emerging markets have transformed the global economic landscape.