The Chinese yuan has been going through its ups and downs in recent years. Ever since the financial crisis hit in 2008, the overall trend has been more down than up, though. Now that the currency reached its lowest exchange value in six years, things are not looking overly positive. At the same time, Bitcoin is going through another price increase, as traders look for ways out of traditional financial markets.
Down Goes The Yuan Once Again
Looking over the Yuan exchange price graphs, it is it not difficult to see things have not gone well in recent times. Although the People’s Bank of China has deliberately devalued the currency quite a bit, it seems there is no bottom in sight. While some financial experts believed the currency had reached a stable point, that psychological barrier was breached yesterday morning.
With the Yuan reaching its lowest trading point over the past six years, any progress made since the recent economic crisis has been erased. This is all despite significant efforts by Chinese banks to influence the currency’s artificial exchange rate. At the same time, the US Dollar has shown a very bullish trend all year and continues to look strong for now.
Although some people would expect significant turmoil to hit the Yuan market, that has not been the case right now. There is no panic selling or buying of unprecedented proportions taking place right now. Chinese investors and traders are not actively pursuing the buyback of US Dollars.
It will all come down to what the People’s Bank of China plans to do. If they were to intervene in the market once again, wild fluctuations might become all too routine in the next few weeks. With the bank’s foreign exchange reserves dwindling rapidly, they may be looking to spend some of their capital on the US Dollar or the other main currencies soon.
Bitcoin Continues To Surge
The contract between the Yuan and Bitcoin could not be bigger. Whereas the fiat currency continues its downward trend, the Bitcoin price is creeping up ever so slightly. Right now, one Bitcoin is worth roughly US$630, a price increase of nearly US$20 in the past 24 hours. This is also a continuation of the earlier Bitcoin price movement we have witnessed over the past few weeks.
China remains the dominant trading market for Bitcoin. While it is uncertain fit eh Yuan woes have anything to do with the Bitcoin price increase, it is not difficult to see why people would make the connection. Being outside of the control of central banks and politics has proven to be quite beneficial to the cryptocurrency so far.
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