November 29, 2022

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Offshore yuan weakens to fresh three-month lows, hurt by equities selloff

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USD/CNH breaches the 6.50 barrier

USD/CNH D1 27-07

The high today hit just over 6.52 as the offshore yuan falls to a low last seen since April against the dollar, hurt by the equities selloff in Hong Kong and China to start the week.

The sharp move in the yuan is likely the cause for some extended moves in FX to start the session, with the kiwi and aussie in particular weaker across the board.

AUD/USD is down 0.5% to 0.7430 while NZD/USD is dragged down 0.8% to 0.6950.

Amid the sharp selloff in Chinese equities, I don’t see officials tolerating a continued drop for too many days. That said, when you put things into context, even with the bloodbath this week the CSI 300 index is still 36% higher than its pandemic low.

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