Dollar tumbles as China’s central bank makes bold attempt to prevent increasing outflow of currency from the country.
The dollar fell by 1.15% at 12:45 EST continuing a third consecutive trading session of losses against the Chinese yuan, with Tuesday’s being particularly severe, as the Chinese central bank makes efforts to prevent the yuan falling further, after an almost continuous depreciation against the dollar through 2016.
In effort to prevent the yuan outflow form the country, China has taken steps to impose controls on outbound investments made by Chinese companies, as well as increasing regulation on the conversion of yuan into foreign currencies by Chinese residents – a practise undertaken by many investors, who borrow yuan, prior to swapping them for dollars and once more converting them into yuan at a more agreeable rate.
Consequent of the release of minutes from the Feds December meeting, the dollar also fell against many major currencies, particularly the British pound and European euro, of which reversed some of the losses they had sustained in the concluding trading weeks of 2016. The Canadian dollar has also been rising against its American counterpart – continuing a six day rise, with the U.S. dollar down 0.59% at 13:00 EST.