China advances development bank to help 10 Eurasian countries curb US dollar risks
President Xi Jinping raises urgency of a bank for the Shanghai Cooperation Organisation’s members, as Washington wields ‘extraterritorial power with the dollar’
A strong push on Monday to create a development bank serving 10 Eurasian countries, including China, would help insulate the group from increasingly risky US dollar-dominated trade while accelerating key infrastructure work, according to analysts.
Such a concessional lender – part of an idea that has long been put on hold – would serve China, Russia, India and seven other nations that have worked together since 2001 as the Shanghai Cooperation Organisation (SCO).
China’s yuan set for more gains against US dollar as Fed sends dovish signals
The Chinese currency is already rising against the US dollar and will receive another boost if the Federal Reserve cuts interest rates
The Chinese yuan is set to continue making gains against the US dollar over the coming months, as China’s central bank sets strong daily reference rates for the currency and traders bet on possible US interest rate cuts, analysts said.
On Monday, the central bank set the daily reference rate just below that year-high peak, at 7.1072 per US dollar.
“We see the unusual appreciation bias in the PBOC’s daily fixing as a policy push to guide the yuan gradually stronger,” Goldman Sachs analysts said in a research note on Monday.
The analysts noted that historically, China’s central bank had tended to set the rate weaker than spot when the dollar was strong and the yuan faced depreciation pressure – a pattern not seen in recent market moves.
“This pre-emptive move by the PBOC should help the yuan catch up with peers and reduce the risk of a sharp appreciation later,” the note added.
In August, the offshore yuan rose by 1.21 per cent against the dollar and was trading at 7.1279 per US dollar as of Monday noon.
