Author: Rae Wee
Article: Original article
Publication date: Wednesday, December 7, 2022
The dollar increased on Wednesday after some of the largest U.S. banks had warned about approaching recession, thus reducing appetites for more risky assets and keeping demand for the U.S. national currency.
Meanwhile, there was also the yuan strengthening registered in Asia due to the country’s government announcing a series of measures that signal sharp changes in its strict three-year-old zero-COVID policy.
China's national health authority stated that COVID-19 cases with no symptoms and patients with mild symptoms are now allowed self-treatment while staying home in quarantine.
The mentioned changes mirror similar moves made by other countries months ago. The announcement is now the strongest evidence that China is preparing its citizens to live with the disease, though analysts say that a path to full economic reopening would be long and uneasy.
As it was said by Christopher Wong, a currency strategist at OCBC, such measures prove the fact that China is taking calibrated steps towards reopening. According to Wong, the anticipation of further easing of measures should continue to favor yuan-linked assets.
Forecast: the yuan is likely to continue strengthening against the dollar