Yuan and Chinese Stock Market Both Weaken Amid COVID-19 Pandemic Fear (Update)

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Due to the impact of the COVID-19 'pandemic' (global outbreak), the preference for safe-haven assets has increased, and on the 13th, the yuan exchange rate once again exceeded 7 yuan per dollar.

On the 13th, the People's Bank of China devalued the yuan. The yuan exchange rate surpassed 7 yuan again since the 28th of last month. On that morning, the People's Bank of China announced the dollar-yuan trading reference rate at 7.0033 yuan, up 0.56% from the previous close. The rise in the exchange rate means that the value of the yuan has fallen accordingly.

The yuan exchange rate has recently shown increased volatility depending on the spread of COVID-19. The yuan exchange rate fell to 6.86 yuan on January 21 amid the atmosphere of the US-China trade agreement but then reversed to an upward trend due to the spread of COVID-19 within China. Recently, as the spread of COVID-19 in China has calmed down, the exchange rate also showed a downward trend again, but as the global financial market fluctuated due to the impact of the COVID-19 pandemic, it turned upward once more.

On this day, the Chinese stock market also plunged more than 4%, so the weakness of the yuan and the decline in the Chinese stock market are likely to further deepen concerns about foreign capital outflows from China.

Meanwhile, Hong Kong's South China Morning Post (SCMP) reported that as the financial market is shaken by the spread of COVID-19, Chinese companies are also facing difficulties in issuing dollar bonds, and warned that if this situation continues, it could negatively affect China's ability to defend the yuan exchange rate when fluctuations increase.

This content was produced with the assistance of AI translation services.