(ATF) – After hitting record highs of close to 103 on the dollar index (DXY) Monday, the USD dropped sharply – by as much as 1.5% – in Asian trading on Tuesday and stood at 101.0800 by 7pm HK time.
Massive liquidity injections by the US Fed, ECB and BOJ, swap lines, and Fed moves to purchase pretty much any securities up for sale, ETFs included, eased dollar stress and took the buoyancy out of the greenback.
Chinese renminbi spot (CNY) was content with hitching a ride and strengthened to 7.0570 against the USD at one point in late afternoon trading. There’s no formal dollar peg, of course, but the way the Chinese currency has traded in a stable range to the USD, there might as well be.
China’s rapid progress in defeating COVID-19 has enabled the People’s Bank of China to keep CNY aligned with the USD even as dollar demand surged.
China announced that Wuhan will lift its lockdown by April 8. As the economy gets back on track, yuan stability will be maintained.