The drop of the attraction of the dollar in China paves the way for the rise of the yuan

China dealers reduce the use of the dollar, in a move that contributed to the lack of green currency shaking the banking system and paving the way for the yuan to achieve more profits. The difference in the future price has dropped between the dollar and the yuan, as reflected by currency contracts for 12 months, with 25% since the end of December. The Chinese banks in the state have gradually moved from the dollar’s request to reduce their dependence on it, which led to the offer in the market, according to traders who asked not to reveal their identity because they were not authorized to speak to the media. During the first half of the year, the dollar fell 10.7% due to the policy for customs and financial duties pursued by US President Donald Trump, which provoked uncertainty, and reduced the pressure of the Chinese Yuan. This situation gives Beijing a margin to reduce its intervention in supporting the currency. Optimistic about the rise of the Ywan, Gotai Junan Hong Kong chief economist Haw Joe said: “Currency exchange contracts reflect the decline in demand for the dollar, as well as optimism about the possibility of strengthening the strength of the yuan.” Joe added that the decline in expectations by interest rates in China, in light of positive economic data, also supported the exchange market. The popularity of foreign exchange has increased in the shadow of the Chinese financial system subject to strict control. An increasing number of businesses and banks are accustomed to risking risks and managing dollar reserves for industry or investment. Government banks have also become one of the most important players as they used currency exchanges to defend the yuan, borrowing and selling the dollar on the date of law. The exchange centers peaked at over $ 100 billion, attracting foreign hedge funds to profitable transactions related to Chinese debt in the short term. By borrowing the dollar to buy the yuan through the exchange transactions, Chinese banks supported the Yuan exchange rate, while foreign investors provided banks in the dollar and received the equivalent in the Yuan to invest in the local bond market. The weakness of investors’ appetite according to traders has begun the Chinese government banks since the second quarter to reduce their loans in dollars for a year through the exchanges. It currently shows the dollar in short -term transactions through these exchanges, which can also weaken the demand for foreign investors for the trading of dollar deposit certificates issued by banks. From the perspective of market prices, the exchange points (the difference between the immediate price and the future price of the currency) tend to fall when expectations begin to rall on interest rates in the United States and China. This possibility has increased with marketing the markets to a possible reduction in interest rates by the Federal Reserve in September, as well as the excellent economic data in China over expectations, which reinforce expects that the Chinese bank can postpone more facilitation measures. The Yuan at the strongest level since November, the Chinese People’s Bank set the price of the reference Yuan at 7.1475 against the dollar on Friday, which is the strongest level since November, despite the dollar increase. Global Banks, including “Goldman Sachs” and “Morgan Stanley”, expected the yuan to achieve limited profits on a scale between 6.9 and 7.1 against the dollar over the next 12 months. Analysts at City Group have indicated that foreign exchange deposits in China have now reached the highest level in about three years, indicating an abundance of dollar reserves. Strategy Rohit Garg and Philip Yin wrote in a recent research note that some businesses may have paid their loans in foreign currencies, giving banks the opportunity to raise more dollars. Often, this increase in deposits coincides with the rise in exchange points between the dollar and the yuan. Analysts expected the dollar exchanges to rise more in the future. “City Group” expects the exchange points to rise for 12 months from the current level of 1.1866 points to about 1,500 points in the coming months, a level that has not been recorded since the early 2023. Joe van Gotai Junan confirmed this expectation, considering that it is conditional at the beginning of the federal to reduce importance.