The Chinese yuan is under slight pressure

The Chinese Yuan came under slight pressure on Friday after it was announced that one of China’s largest real estate companies has filed for bankruptcy protection in the United States.

The news about Evergrande, which has been in trouble since 2021, adds to concerns about the Chinese economy.

Meanwhile, the spread between US and Chinese 10-year bonds is widening, 1.7 percentage points now from 1 percentage point at the start of the year. This puts pressure on the Chinese currency, which was trading at 7.29 against the dollar on Friday. On a weekly basis, the yuan has lost more than half a percent.

According to Bloomberg news agency, the psychological threshold for the dollar/yuan in Beijing is 7.35.

At this level, the PBoC [verder] We need to step in,” said Linux investment expert Kevin Verstreet.

On Thursday, the People’s Bank of China intervened with a 168 billion yuan capital injection. Earlier this week, two significant interest rate cuts were made, but the yuan has only managed to rebound temporarily after these measures. Currency experts at Nomura expect another rate cut by the Chinese central bank this year.

The euro/dollar was trading at 1.0874 on Friday morning and therefore stable around the level of Thursday evening. There is limited upside potential for the European currency, according to currency trader Martijn Weller of Monex Europe, he told the ABM Financial News camera. The currency pair is likely to continue moving between 1.09 and 1.12.

The macroeconomic calendar barely filled out on Friday. Final inflation figures from the eurozone will be published later in the morning, but they may differ slightly from interim data, which already showed inflation in July came in at 5.3 percent, from 5.5 percent in the previous month.