RMB has been appreciating but this is an abnormal behaviour because China economic growth is weakening and the central bank has been increasing the monetary supply.
The central bank has lowered the bank reserve requirement ratio to encourage lending and also pumped US$83b into the financial system.
Therefore, the RMB shouldn't be appreciated at all under normal circumstances.
What is/are causing RMB to appreciate then?
The proximate cause is the US Fed. The US Fed had become dovish recently by stating that it would be patient in hiking rates. The Fed's patience might be due to Trump and/or the economic data. This caused the USD to depreciate against other major currencies. Consequently, hungry investors are going after higher investment returns by snatching up assets and investments in China since US interest rates are not going to spike much in 2019.
1 comment:
https://sg.finance.yahoo.com/news/chinas-economy-cools-fourth-quarter-2018-growth-hits-024532796--business.html
Under normal circumstances, a weakening economy won't have an appreciating currency and vice versa.
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