The value of the Chinese yuan fluctuated dramatically on Nov. 4 as votes were being counted for the U.S. presidential election.
Around 9 p.m. Eastern Standard Time (EST) on Nov. 3, as votes for U.S. President Donald Trump led in the state of Florida, the yuan’s offshore market rate plunged from $0.14975 to $0.14831. The value fell by one percent within minutes.
As ballots were counted and the race was too close to call in key background states, the yuan’s offshore rate increased during early morning EST of Nov. 4 and reached $0.15027 at its peak after 6 a.m. That figure was 1.3 percent higher than nine hours prior and close to this year’s high. The rate then stabilized throughout the rest of the day.
Professor of business at the University of South Carolina Aiken Frank Tian Xie analyzed that as Chinese regime favors a Biden win, and yuan investors likely thought the currency would be valuable if Biden wins.
“When they [yuan currency investors] saw the poll numbers with Trump in the lead, the RMB [renminbi, China’s official name for its currency] in the offshore market tanked, and RMB inside of China dropped a little bit as well,” Xie wrote in an email.
Nick Reece, senior analyst and portfolio manager at Merk Investments, also commented that the U.S. election impacted the Chinese yuan’s exchange rate.
“Chinese yuan sold off, essentially on the risk of a Trump re-election,” Reece told The Epoch Times in a phone interview. “It was expected that Biden would win and win by a pretty big margin. And then as the votes started getting counted, it became clear that it was going to be a very close race, and so I think that the CNY [Chinese yuan] sold off.”
The Chinese yuan once reached $0.13930—its lowest point in the past ten years—on Sept. 4, 2019, amid tensions in the U.S.-China trade war. U.S. officials have accused the Chinese regime of manipulating the CNY’s exchange rate.
Washington and Beijing authorities signed the “phase one” trade deal on Jan. 15 this year, with the yuan increasing steadily for weeks. Then the CCP virus pandemic erupted, bringing economic instability.
On May 18, the yuan dropped to $0.13962—its lowest in the past 12 months. It has since gone up as the global economy recovers from the pandemic’s impact.
A cheaper yuan is better for exports of Chinese products, and though imports coming into China would be more expensive. A cheaper currency also reflects a weakening economy and thus, makes a country less attractive to foreign investment.