09.07.202015:44 Forex Analysis & Reviews: Chinese yuan continues to grow rapidly

The Chinese yuan continued to climb to the upper borders on Thursday due to a good strengthening of the main stock indexes and growth in the securities sector.

The positive noted on the stock exchanges of the PRC was transmitted to the foreign exchange market. The China CSI 300 index was able to significantly rise. The overall rise this week already amounted to 9%, which allowed it to reach maximum levels and even set another record after several years. Amid such positive news, the Chinese yuan also aims to strengthen. It was even able to overcome the level of 7 yuan per dollar, which was last stormed in March this year. Moreover, the USDCNY currency pair now checks the high value for strength, which was recorded almost two years ago.

Experts are not too surprised by the dynamics of the renminbi, as they previously noted that the state coped with the next wave of coronavirus infection that overtook the world this summer. The Chinese economy is gradually emerging from the crisis, which the country's authorities are in a hurry to share with the world. Literally, a shopping boom has occurred in the Chinese securities market. Investors were swiftly buying stocks, followed by inevitable growth. Thus, net purchases of securities in the first seven days of the current month turned out to be at the level of $ 7.85 billion, and this amount became more than for the entire previous month. China's bonds are also popular among foreign investors.

Such rapid positive dynamics can ultimately have a positive effect on the level of state GDP for the second quarter of this year. However, not all analysts are sure of this. There are also those who reacted rather restrainedly to the current situation while pointing out that it is worth waiting for the official statistics, which will be released next week.

Other experts established themselves in their position which in China is nothing more than a V-shaped economic recovery, which the United States of America dreams of. Nevertheless, it is not yet clear how significant and firm it will become. The unresolved conflict between America and China over Hong Kong adds fuel to the fire. Recently, there has been a surge of tension on this issue, which makes us think about a new round of disagreements.

There are more radical views on increasing interest in Chinese markets. Some argue that all this was created artificially due to the hype that the state media raised. Recently, they have been very active in promoting the purchase of shares as a way to preserve and increase their assets. However, history has already had a similar experience, when everything ended rather sadly. In the end, the US currency may lose support from the PRC. At least a separate part of the forecasts indicates a decrease in the dollar against the Chinese yuan to 6.95 yuan per dollar. However, some forecasts state that in the third and fourth quarters of the current year the currency pair will concentrate in the region of 7.18 yuan per dollar and 7.20 yuan per dollar, respectively.