Against the background of processes in relations between the US and China, which many call the trade wars, the national currency of China is weakening. This week, the yuan fell below $ 6.93 per dollar. This figure is close to at least January 2017. The decrease is due to a number of factors — from the weakening of the stock market to the uncertain monetary policy of the people’s Bank of China. Despite the attempts of the Central Bank to maintain the yuan by loosening reserve rules for banks, the largest stocks lost more than 5%.
For the past six months, the yuan to the dollar. The yuan became one of the Asian currencies with the worst performance. Investors adjust their positions to reflect changes in market sentiment.
In an interview with Bloomberg Ken Peng, an expert on the investment strategy of the Hong Kong Citi Private Bank, said:
Aktiviziruyutsya investors, betting that the yuan will fall to 7 per dollar, after the currency reached the level of 6.9. The reduction of the replacement ratio of reserves sends a strong signal that China is entering a cycle of depreciation of the national currency, and all foreign news pointed out the strengthening of the dollar.
Previously, analysts have already established the presence of moderate correlation between price movements of the yuan and bitcoin. Before he enacted a prohibition of the people’s Bank of China, the share of China accounted for more than 90% of the total trade volume of the main cryptocurrency, and the relationship of two very different assets was a logical move. Now, however, due to the fact that most local kryptomere have closed or moved operations outside of the PRC, this relationship is significantly weakened.
Last price drop of the yuan gave the people’s Bank of China the opportunity to resort to restricting the movement of capital measures, similar to those that were implemented in July. Bitcoin is traditionally positioned as the answer to any centralized financial control. For example, the devaluation of the Turkish Lira and the Iranian Rial on the eve of the us sanctions led to a rise in trading volume, and even bitcoin prices in these regional markets. However, in China there is a similar effect.
According to LocalBitcoins, the minimum asking price when selling bitcoins for RMB 46,000 yuan — $6643, which is only $20 higher than the global rate. Buying BTC China $30 cheaper international prices.
The volume of bitcoin trading has not demonstrated a significant response to the decrease in the volume of trade in yuan. This means that the idea that investors are turning away from devalued Fiat in the direction of the cryptocurrency, not true.
If you look at what is happening globally, it is possible to notice the confirmation of the postulate that driving force for courses of traditional and digital currencies are completely different fundamental factors (thus, these types of assets is almost not correlated). While Fiat currencies more sensitive to global politics, inflation, interest rates, debt and more for cryptocurrency more important factors such as regulation, flow of investment, the degree of acceptance by users, etc.
The graph illustrating the trade in the pair bitcoin/yuan on LocalBitcoins this week
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