China’s currency hit its highest level in more than a year as retail sales rose for the first time in 2020, underscoring the country’s economic recovery from the coronavirus pandemic.
The onshore-traded renminbi strengthened as much as 0.3 per cent to Rmb6.7897 per US dollar early on Tuesday, its firmest level since May 2019. That coincided with official data that showed retail spending increased 0.5 per cent in August compared to a year ago. The less tightly regulated offshore-traded renminbi strengthened 0.3 per cent, past Rmb6.8 per dollar.
China’s central bank “has shown few signs of resistance to a stronger renminbi, paving the way for currency appreciation”, analysts at JPMorgan wrote in a note. They added that conditions were “favourable for less official resistance to foreign exchange strength overall, especially in the absence of obvious signs of renminbi overvaluation”.