File Photo: (AP Photo/Kin Cheung)
File Photo: (AP Photo/Kin Cheung)

WATCH: Renminbi rises 0.5% against the US dollar, causing optimism amongst global investors

By Vuyolwethu Fundam Time of article published Jan 21, 2020

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China's currency gains more traction, wiping out heavy summer losses in the midst of easing tensions between Beijing and Washington.

The renminbi rose as much as 0.5% against the US dollar, for the first time since August, passing the Rmb 6.9 mark and taking its increase to nearly 1% in 2020.

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Video by: Vuyolwethu Fundam, Belt and Road Initiative, BRI+

The rise in this year's early days reflects the positive mood among global investors and cautious optimism of strengthening ties between the world's two largest economies.

August's currency experienced its worst sell-off in a quarter-century and ultimately plummeted to almost 7.2 to the US dollar in a decline that ricocheted around world markets.

Traders and investors are watching the currency closely as a wider bellwether market to which, according to analysts, movements in many other assets are often closely linked. 

Nonetheless, stocks were generally higher in Asia on Monday, with China's CSI 300 index benchmark and Hong Kong's Hang Seng both closing down around 1% higher, whereas London's FTSE 100 scored another 0.4% in morning trading.

Monday's gains came days before the US and Chinese officials agreed to sign a trade pact in Washington on Wednesday, which will help lock upon the terms of a limited deal reached last month.

The deal would prohibit the US from imposing more levies on Chinese imports, which will also halve tariffs on $120 billion in imports levied in September.

Since the trade truce was announced, China's central bank has set its daily midpoint level around which the currency can fluctuate gradually stronger.

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