Beijing’s move to ease quarantine requirements for inbound travellers helped the yuan on Wednesday and boosted expectations of a faster economic recovery.
In the spot market, the yuan opened at 6.7050 per dollar and was changing hands at 6.7022 at midday, 58 pips stronger from the previous late session close.
China on Tuesday slashed the quarantine time for inbound travellers by half to seven days in a major easing of one of the world’s strictest Covid-19 curbs.
It is the first time quarantine has been reduced since the outbreak of the Covid-19 pandemic in the beginning of 2020.
“Such a policy tweak is positive to China’s growth outlook and the H2-growth projection should be subjected to upward revision,” said Ken Cheung, chief Asian foreign exchange strategist at Mizuho Bank, adding the move paved the way for further relaxation.
However, “achieving the annual target of around 5.5% growth will remain very challenging,” he said. China’s economy has recovered to some extent, but its foundation is not solid, Premier Li Keqiang said on Tuesday.
Hong Kong’s incoming Chief Executive John Lee stated that further relaxation of mandatory centralised hotel quarantine time for inbound travellers into Hong Kong is under consideration.
It could include cutting the duration from seven to five days while allowing Hong Kong residents to quarantine at home.
This would be another major step forward after the most recent reduction in quarantine time in April to seven days from 14. It was reduced from 21 days to 14 days in January.
- Reuters, with additional editing by George Russell