Beijing started to get uncomfortable with strengthening Yuan, EUR plunged as COVID cases soared again

The China Foreign Exchange Committee — founded under guidance from the central bank – recently urged banks to limit speculative FX trading. CNY has climbed to its 6-year high versus USD, and it seems that Beijing has started to feel uncomfortable with this trend. Yuan is so far the top performer among emerging market currencies in 2021. It benefits from robust exports and foreign investments in onshore bonds. Major banks in China have been advised to keep a close eye on their risk management and stay risk-neutral in FX trading.

EURUSD plunged by 0.23% earlier today but has managed to regain some losses at press time. Currently, the pair is trading at 1.1272, down about -0.07%. Surging numbers of COVID cases have triggered another round of full lockdown in Austria. German Health Minister Jens Spahn commented that vaccination alone will not reduce the numbers.