Is USDCNY a Buy, Sell or Hold?
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USDCNY Exchange Rate
Provider: USDCNY
Verdict: When you trade USDCNY you are speculating on the exchange rate between the United States Dollar (USD) and the Chinese Yuan (CNY). i.e. how many Chinese yuan are needed to buy one U.S. dollar. USDCNY is mainly effected by, trade flows between the United States and China, the two countires (very differeing) economic policies, local interest rates, and how stable both counties economies are. One things that makes USDCNY difficult (or easy if you are in the know) to trade is that the Chinese yuan is not fully floated on the open market (therefor slightly more illiquid), and its exchange rate can be controlled by the People’s Bank of China (the Chinese central bank) making it more volatile).
Why buy USD over CNY:
Despite opening up fully in early 2023, the Chinese economy failed to live up to the positive expectations. Geopolitical tensions saw massive capital and investment outflow from the country. Consumers were also restrained; while the Chinese property market is struggling despite some modest reflationary policies. For 2024, the big question is whether China can reverse the current economic slowdown. 24/11/23
Pros
- Brewing geopolitical tensions
- Higher US rates
- Weak Chinese economic outlook
Cons
- China’s economic weakness may subside in the next few quarters
- Capital outflow could reverse
- Reflationary policies from PBOC
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Outlook
(4)
Overall
4USDCNY Analysis & Guides
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