(Yicai Global) May 19 -- The yuan’s central parity rate against the US dollar fell 174 basis points from 6.8612 yesterday to 6.8786 today in its biggest drop since February 20, snapping its six-day winning streak.
The dollar has gained strength as sentiments about the possibility of US President Donald Trump being impeached have changed. The market’s focus shifted to the widely-anticipated US Federal Reserve interest rate hikes after better-than-expected US economic data was released. The dollar index rebounded to as high as 98.07 last evening after hitting 97.28, a record low since Trump took office. It hovered around 97.7 when Asian stocks were in morning trading.
The dollar is set to grow stronger in the medium- and long-term, insiders said. Capital is likely to flow back to the US as the Fed moves ahead with monetary policy normalization, Trump’s tax reform and fiscal stimulus policies are implemented and risk sentiment corrections push up US stocks, they said.