Chinese yuan reaches 6 month low against US dollar

27 Feb

yuan-dollar-400x272During Wednesday this week the yuan, the chinese currency, reached a 6 month low of 6.1192 against the US dollar.

In China, this was a catalyst for fears of ailing economic growth in the country, however (as reported by the BBC) numerous Chinese media outlets have attempted to ease concerns.

Chinese paper China Daily, explained that “the unexpected fall of the yuan against the US dollar since mid February has gained far more attention than is justified by its size.”

This falling value of the yuan follows reports of a new Chinese central bank strategy of lowering the value of the yuan in preparation for wider trading of the currency. A more free yuan will give Chinese consumers more flexibility as it will be easier for them to convert their yuan into other competing currencies.

These reports of the new central bank strategy, aiming to one day rival the US dollar as the most used currency in the world, follows news that the Chinese yuan has this week overtaken the Swiss franc as the world’s 7th most used currency. In fact the Chinese yuan has increased its world usage dramatically. In the last three years the yuan has overtaken 22 currencies, including this weeks Swiss franc.

Despite the falling value of the yuan against the US dollar, it all seems to be going according to plan for the Chinese central bank, a plan that is long term and a threat to the US dollar’s world dominance.

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