The Chinese yuan is currently trading at an eight-year low against the US dollar.
The USD/CNY currently sits at 6.8486 on Tuesday, the highest level seen since February 2, 2009.
After hitting 6.0415 in early 2014, the lowest level on record, the US dollar has now strengthened by 13.3% against the yuan.
This year alone it’s risen by 5.5%.
However, unlike the pandemonium created in financial markets earlier this year, the weakness in the yuan — as yet — has not had a meaningful impact on financial market sentiment.
Somewhat surprisingly, it’s actually largely been ignored.
Perhaps this is due to the fact that it’s not that the yuan is weaker but rather that the US dollar is stronger, at least in recent weeks.
On Monday the US dollar index rose above 100 for the first time since early December last year, reflective of broad-based US dollar strength.
Indeed, from the start of October, the US dollar has risen by 4.5% and 6.6% respectively against the euro and the Japanese yen.
In comparison, the dollar has only strengthened by 2.7% against the yuan.
For the moment, in the absence of concerns surrounding the health of the Chinese economy and signs of increased capital outflows from within China, that, for the moment at least, appears to have comforted financial markets.
Whether that view is sustained will likely be determined by movements in the US dollar index over the coming days.
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