As the Yuan gains momentum, the Bitcoin price is taking a big hit in China.
For the first time in months, the Chinese Yuan has noted significant gains. Currency markets responded negatively to this news, as the dollar sank a bit. Moreover, this news seems to indicate financial experts got their 2017 Yuan prediction entirely wrong. Chinese traders are also driving the Bitcoin price right now, although that may not be related to the Yuan value increase.
Gains made by the Yuan come as a complete surprise to all financial experts. In fact, the currency noted the largest two-day increase since 2010. Overnight borrowing costs in Hong Kong have risen sharply, which seems to be the driving factor for this change. But the news has far wider repercussions for the financial market.
Yuan Gains Shake Up Every Market
On the US Dollar front, the currency took a dive as a result of profit taking. The US Dollar lost over one percent against the yen and lost ground compared to the Euro. Quite an exciting development of the global financial market, albeit one that is rather unexpected. Financial experts predicted a future weakening of the Yuan, but this [brief] trend seems to say otherwise.
One could argue the Chinese government and PBOC will do everything they can to avoid a repeat of 2016. However, due to dwindling foreign exchange reserves, that is easier said than done. At the same time, one needs to keep in mind this may only be a brief trend that will subside quickly. Parity between the US Dollar and Euro seems far away as well, which makes investors doubt the future of these currencies even more.
This goes to show how volatile traditional financial markets can be. Since no one expected a rise of the Yuan value, the move has taken everybody by surprise. Regarding of how long-lived the trend is, it goes to show prediction currency markets is incredibly difficult. Only time will tell if the experts will be right in the end, though.
As the Yuan gains momentum, the Bitcoin price is taking a big hit in China. Earlier today, the market price slipped by nearly 1,000 CNY. Right now, the market is struggling to find its solid bottom again, as the bears and whales are jockeying for position. It appears we can expect a lot of market volatility throughout the day.
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