China’s Yuan: A Roller‑Coaster Ride
The Chinese yuan is still feeling the squeeze, with its value hovering in a tight squeeze. Meanwhile, the 10‑year government bond yield is basically doing a gentle glide, staying stuck between 1.60% and 1.63%.
New Money Drop‑In at the Bank of China
- Bank of China is planning to send 60 billion yuan into Hong Kong’s market this Friday.
- Out of that, 40 billion yuan will be for 3‑month bills; the remaining 20 billion yuan will go to 1‑year bills.
- The deal will finish on February 18, and the Hong Kong Monetary Authority’s Central Moneymarkets Unit is on the lookout for the best bidders.
The idea? Calm the currency chaos. But game‑plan wise, the yuan is still on a bearish rebound. Any more depreciation? It depends on the big‑picture: global trade vibes and U.S.–China diplomatic drama.
Why Bond Yields Are Throwing a Subdued Party
The central bank might keep the policy light to keep this economy from taking a nosedive. That means the 10‑year bond yields stay calm, riding low because liquidity is being poured into the market.
Trump’s Tariffs Throw a Wild Card on the Mix
- U.S. is boosting the aluminum tariff from 10% up to 25% on March 12.
- Although China only takes in less than 2% of the U.S. steel imports (29 m net tons last year), those new tariffs add a whole layer of uncertainty.
- Every time the tariff figure changes, capital can try to escape the yuan, putting extra pressure on the currency.
In short, the yuan’s volatility is sticking around. If the U.S. continues widening interest‑rate spreads, capital outflows could grow even more, weighing even heavier on the currency.
