The central parity rate of China’s renminbi, or yuan, weakened 300 pips to 6.7482 against the US dollar on Tuesday, according to the China Foreign Exchange Trade System. In China’s foreign exchange spot market, the yuan is allowed to rise or fall 2 percent against the central parity rate on each trading day, Xinhua News Agency reported.

The central parity rate of the yuan against the US dollar is based on a weighted average of the prices offered by market makers before the opening of the interbank market on each business day. Meanwhile, foreign investors are shedding the yuan and fleeing China after the COVID-19 lockdown and rate cuts, exacerbating foreign capital outflows.

The HK Post reported that investors are exchanging their money from the yuan to dollars and pushing the dollar higher while driving the yuan lower. Ratings agency Barclays also lowered its yuan forecast to 6.9, but said the yuan could hit 7% if lockdowns and supply chain disruptions continue, the HK Post reported.

In March, Hong Kong investors sold a record $24.2 billion of yuan-denominated debt. The Chinese investment exodus is fueled by fears about China’s diminishing growth prospects, falling bond yields and rising rates on US investments.

As the United States and other Western countries raise interest rates to fight inflation, China’s central bank plans to cut rates to stimulate the economy. In April, the central bank reduced reserve requirements from 9% to 8% in a bid to increase the money supply.

Investors had already started to pull money out of China by 2021 due to ongoing COVID lockdowns, supply chain issues and Chinese President Xi Jinping’s crackdown on many business sectors, including technology and education. Foreign investors sold $6.2 billion worth of Chinese government bonds in April, marking three consecutive months of liquidations, the longest since 2015. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)