The yuan has also gained ground on the dollar. The yuan has risen between 2.4% and 2.8% this year against the greenback — depending on whether it trades in China or offshore. Both versions are now at their highest levels against the dollar in three years or more. The offshore rate currently trades at 6.34 yuan per dollar, a level not seen since May 2018.
Headed into December, the yuan’s gain this year was “the best in the world,” said Marc Chandler, managing director for Bannockburn Global Forex, an Ohio-based capital markets trading firm.
Booming exports and hot money chasing comparatively juicy returns on Chinese government bonds are behind the surge “despite weaker economic growth,” according to Becky Liu, head of China macro strategy at Standard Chartered Bank.
The currency’s strong performance could continue into 2022, even as China’s economy struggles with factory inflation, a major slowdown in real estate, and an ongoing regulatory crackdown targeting its private sector.
Liu expects the yuan to strengthen to 6.3 per dollar in the first few months of next year. Analysts at Goldman Sachs suggest the same could happen in the first half of 2022, for similar reasons. (In 2014, the offshore yuan touched nearly 6.01…
