Outperforming Chinese Yuan Marks 2021’s End With Three-Year High

(Bloomberg) -- The Chinese onshore yuan rallied to a three-year high against the dollar on the final day of 2021, a year in which robust export growth and solid investor flows supported the currency. 

The yuan traded at 6.3492 as of 6:42 a.m. in New York. It rose as much as 0.5% to 6.3404 per dollar, a level last seen in May 2018, with thin liquidity likely accentuating the moves.

The Chinese currency is ending the year as the top performer among major emerging-market currencies, gaining 2.8% against the dollar while most other peers declined. The People’s Bank of China has attempted to curb the yuan’s rise using methods such as weaker fixings of the currency. 

The yuan’s strength may be limited going into 2022, according to BNY Mellon strategist Geoffrey Yu. 

“We still think PBOC will be reluctant to let it strengthen aggressively given exports are the only good growth driver right now,” he said. 

China’s overseas shipments have posted at least double-digit gains in every month this year -- February was the standout, with shipments jumping 155% from a year-earlier slump. Yet the nation faces “unprecedented” difficulty in stabilizing trade in 2022 as favorable conditions that boosted export growth this year won’t be sustainable, a commerce ministry official said on Thursday. 

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