Yuan edges down as new Fed head takes office

Updated 2018-02-06 09:42:05

Leadership shift to lead to short-term market fluctuations: expert

The onshore and offshore yuan slipped slightly on Monday following the leadership change at the U.S. Federal Reserve.

As of 6:30 p.m. Beijing time on Monday, the offshore yuan had slipped by 0.29 percent, while the onshore yuan had edged down by 0.18 percent.

Monday marked the first day for Jerome Powell as the new head of the U.S. Federal Reserve.

Cong Yi, an economics professor at the Tianjin University of Finance and Economics, said that the change in leadership would naturally lead to some short-term market fluctuations, as there must be speculative investors who want to make use of this news to gain profits.

"There have been market speculations that Yellen was relatively mild, and the new head will be more resolute in raising interest rates of the U.S. dollar," he told the Global Times.

But Cong stressed it is in fact very unlikely that Powell would bring many personal traits into the Fed's future policymaking. Instead, he is very likely to hold on to the policy tone set by Janet Yellen.

"The current trends of the U.S.' policy are to raise U.S. dollar interests and unwind the U.S. balance sheet. Powell will also stick to those trends, in my judgment," Cong noted.

Liu Xuezhi, a senior expert of macroeconomics at the Bank of Communications, told the Global Times on Monday that the change in Fed leadership will not alter the Fed's slow pace of U.S. dollar interest rate hikes.

Fortune magazine reported on Saturday that Powell is expected to raise interest rates three to four times in 2018.

The Fed raised the U.S. dollar's interest rates five times during Yellen's term.

"The interest rate hikes theoretically would cause the dollar to become strong, but in fact, the dollar has been edging down. This shows that there are lurking risks, like liability bubbles, to the U.S. economy," Cong said.

Liu said that the U.S. dollar's depreciation could be a short-term status. "The yuan won't maintain its appreciation trend for a very long time," he said. Cong also noted that the U.S.' future interest rate hikes would add to capital outflow risks in China, but such pressure would not be too intense.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58February 22 2019 21:56:21

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16February 22 2019 21:56:21

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18February 22 2019 21:56:21

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

China World Business Sports Showbiz Audio
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
China World Fun Travel Entertainment Sports
Beijing Shanghai Guangzhou
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords