China’s Yuan hit the lowest mark against the US dollar in the last 18 months on Tuesday, falling to 6.7134 against the USD, the lowest figure since October 30, 2020.
The People’s Bank of China has been lowering the value of the country’s national currency since late April amid a new COVID-19 outbreak in Beijing and the ongoing lockdown in Shanghai, which resulted in disruptions in production and logistics chains, Xinhua reported.
Last Thursday, the average exchange rate of the yuan against the US dollar jumped by 505 basis points; however, the very next day, it dropped by 660 basis points. The decline continued on Monday and Tuesday, with the currency falling by another 567 and 235 basis points, respectively.
On March 5, the Chinese authorities announced their intention to maintain a stable yuan exchange rate in 2022 and to implement a prudent monetary policy with a view to preventing financial risks and supporting economic growth.
China’s export growth witnessed a sharp fall to 3.9 per cent in the month of April, as the draconian COVID-19 curbs that the country imposed in late March in the economic hub of Shanghai, and other cities start to show their effect on the economy.
China’s overall trade grew by 2.1 per cent in April, slowing down significantly from 7.5 per cent in March, while the growth in exports saw a significant downturn falling sharply from 14.7 per cent in March to 3.9 per cent in April.
Economists say that the current slowdown can primarily be attributed to the country’s draconian lockdown rules which are among the strictest in the world.