With data pointing to a significant slowdown in many of the world’s major economies this year, dozens of stock benchmarks entered bear markets in the past weeks.
On Thursday, it surged 0.92% -- the most since 2015 -- versus a group of 24 exchange rates, according to data compiled by Bloomberg. Propped up by a central bank that’s easing less aggressively than peers and evidence of the country’s relative success in slowing the virus outbreak, the yuan’s steadiness has also helped make government debt attractive to overseas investors.
The yuan is the fourth best-performing currency among some 20 emerging-market exchange rates since the start of March, with its one-month implied volatility the second lowest after the greenback-pegged Hong Kong dollar. Also reducing depreciation pressure on the yuan is the yield premium that China’s 10-year sovereign bonds have over U.S. Treasuries: the gap swelled to the largest since 2011 earlier this month, which makes onshore notes attractive to global funds managed by the likes of BlackRock Inc. and JPMorgan Asset Management.
Still, increasing evidence that the Chinese economy took an even bigger hit than expected remains a threat for the yuan. Data published Monday showed an across-the-board slump in manufacturing, retail sales and investment in January and February, with all the numbers hitting historic lows. That prompted at least 12 banks or analysts to start forecasting a contraction in the first quarter.