Chinese Yuan Falls to Nearly 14-Month Low Against the U.S. Dollar

Forex - The Chinese yuan has dropped to nearly a 14-month low against the US dollar this morning amid rising US Treasury yields. The yuan is on track to close the third consecutive year with losses due to widening yield differentials between the world's two largest economies and trade tariff threats from US President-elect Donald Trump.

USD/CNY rose by 0.10% to reach 7.3088, with the 7.30 level last seen in November 2023. Its offshore counterpart, USD/CNH, is trading at 7.3080.

Expectations that the Federal Reserve will implement slower interest rate cuts next year have supported Treasury yields, widening the premium over Chinese counterparts that have rapidly fallen to record lows in recent months amid hopes for new economic stimulus.

People's Bank of China (PBOC) Governor Pan Gongsheng stated in an interview with the official People's Daily over the weekend that there is still "some room" to further lower reserve requirements and that monetary policy adjustments need to be intensified.