Here’s how the Chinese currency interacted with the start of the Biden era

After years of steep swings during the days of former US President Donald Trump, the Chinese currency celebrated Joe Biden’s inauguration as the new president of the world’s largest economy with a steep rise as it hovered around its 30-month high against the US Dollar with hopes of a less harsh approach by the new US administration to the issue of economic relations with Beijing.

A report by the British “Financial Times” newspaper indicates that investors are placing their hopes in a less fierce approach by Democrats to the Chinese issue, and that the worst is over with regard to the issue of the trade war between the two largest economies . in the world.

However, the continued uptrend of the Chinese currency this year remains a subject of controversy among investors, with expectations that the renminbi will lose 6-7% of its value against the dollar in 2021, which would throw a shadow on prices. Chinese assets that have enjoyed great popularity with the high returns they provide. During the time of Corona.

China has two types of renminbi, the unit of which is the yuan, the first which trades on the Chinese mainland and fluctuates within a narrow range against currencies determined by the monetary authorities, and the external renminbi, which does not is not subject to much scrutiny by the People’s Bank of China, the central bank, but the authorities are closely monitoring its movements.

Chinese assets are seeing increased demand as the economy recovers from the consequences of the pandemic and the attractive returns Chinese investment tools are offering investors looking to earn good returns in a near zero environment amid the measures easing measures taken by central banks around the world to mitigate the consequences of the pandemic.

Foreign investment funds have increased their holdings of Chinese bonds and equities over the past year by around 30% to a new all-time high supported by China’s accession in a number of indicators in addition to the yield premium of interest rates, which outperforms many other markets.

The Chinese currency has risen in the last six months of 2020, hovering around record highs against the dollar, as investors bet the Biden administration will cut fees on Chinese products, which have cast a heavy shadow over the performance of the Chinese currency over recent years.

Analysts tell the British newspaper that one of the reasons that led to the strength of the Chinese currency in recent months is the weakening of the dollar against major currencies with the quantitative easing measures taken by the Federal Reserve to mitigate the consequences of the Corona Pandemic.