On Wednesday, the Chinese yuan rose moderately against the US dollar, and reached its highest level since May, as the easing of concerns about the new strain of coronavirus "omicron" provoked increased investor demand for emerging market currencies.
Earlier today, the USD/CNY pair fell to 6.3456, updating the 2021 minimum set in May. The US dollar came under pressure amid increased confidence that the omicron strain will not stop the global economic recovery.
Since the beginning of this year, the Chinese yuan has risen by about 2.7% against the US dollar, recording the best result among the major currencies. The catalysts for such a rally were the recovery of China's economy after the pandemic, as well as increased demand for Chinese bonds from foreign investors. The Central Bank's tolerance of the yuan's appreciation has also increased traders' confidence that the strengthening of the Chinese currency will be sustainable.
However, recent attempts by the Central Bank of China to ease monetary policy mean that China's policy will be even more different from that of the United States, as a result of which assets in yuan will be less attractive to foreign investors.