PBOC strengthens yuan as China goes into lockdown

The PBOC has been strengthening Yuan against USD throughout 2020 and that trend is not stopping in the new year, with the latest onshore fix set at 6.4605, a big drop down from yesterday’s 6.4823 as offshore trading (USDCNH) gets below the 6.45 level. The weekly chart shows the strength of this trend with the 2018 lows at 6.25 not that far away:

Meanwhile China has had the biggest jump in daily cases of COVID-19 in over five months. From CNBC:

Local authorities in regions near Beijing are stepping up restrictions on social activity as new coronavirus cases grow.

Langfang city, located about 1.5-hours south of downtown Beijing, told its nearly 5 million residents on Tuesday to stay home for the next seven days. The city is in Hebei, the same province as Shijiazhuang, a city of 11 million people that locked down late last week after a spike in coronavirus cases.

Shijiazhuang reported 39 new confirmed cases for Monday, while Langfang disclosed one. That brought the total number of current confirmed and asymptomatic cases in Hebei province to more than 500 people.

Separately, two regions of China’s northernmost province of Heilongjiang announced lockdowns on Tuesday. The province reported one new confirmed case and 36 asymptomatic ones for Monday.

This is going to have a big impact in the first quarter if the lockdowns continue, but Chinese stocks (both mainland and occupied Hong Kong) are treating this new outbreak as benign with new weekly highs on the Shanghai Composite and Hang Seng Index as other Asian bourses struggle to find traction.

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Comments

  1. Combined population of Langfang and Shijiazhuang is 16 million. Total of 40 new cases for those 2 cities on Monday.
    Unclear how in a country of 1.3 billion this is going to have a ‘big impact’ in the first quarter, even if the lockdown continues.

      • The implication being that the Communist Party is making it all up and it’s actually 40 million? While the CCP isn’t the most honest organisation (at the risk of understating things), here’s the reality — people have been bleating for months that virus numbers are being lied about in China. And it is clear that in the initial Wuhan phase there were lies aplenty.

        However, after that initial Wuhan outbreak period, there is no evidence of unreported widespread outbreaks of COVID-19 in China. It would be a major miracle to keep such things under wraps with modern communication technology.

        But if people want to believe that in reality, COVID-19 is rampant in parts of China, let them believe that, even if all the objective evidence suggest otherwise.

          • China have had a string of minor outbreaks in the last 6 or so months, and have contained each one of them. It’s much easier for a totalitarian government to do this:
            -contract tracing is excellent there — each person’s mobile phone’s movement is followed, ‘privacy concern’ protests aren’t an issue.
            -lots of manpower. They are testing every person in Shijiazhuang, all 11 million of them. No excuses from anyone not wanting to be tested.

          • yes, the old welding of apartment block entry doors closed usually takes care of lockdown enforcement!

          • MountainGuinMEMBER

            Yes China seems to have kept recent outbreaks quiet, but it is cold in Langdale, top temps in single digits, and some if the new variants are more infections.
            So its odds on China can squash this, but lockdowns do hurt esp if multiple cities are locked down.

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