Investors should avoid Chinese currency risk and adapt to higher foreign exchange volatility, three state financial newspapers in Shanghai and Beijing said in front-page commentaries on Tuesday after more than a week of strong gains by the yuan.
The currency may have strengthened, but this year it would be volatile in both directions, they warned.
"Even if the depreciation pressure has diminished, two-way volatility in the yuan exchange rate will still be the norm in 2023," the Securities Times said. The Federal Reserve's raising of interest rates and the resulting strength of the dollar was a key factor weighing on the yuan in 2022, since higher U.S. yields attracted money to dollar-denominated assets.
"After a reasonable correction, the yuan will likely continue to be subject to two-way volatility, gradually converging towards a reasonable range in the long run," the newspaper said.
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