Compared to a basket of other currencies, the Chinese Yuan is falling fast. It has been dropping for a record 16 days straight, the longest run since the currency basket was created 5 years ago. It has now fallen 4 percent against the Euro and Australian dollar. The yuan has also been falling against the dollar but has stopped recently.
In late May, rising tensions with the U.S. contributed to the yuan falling to near its lowest level since 2008’s financial crisis and factors such as the Hong Kong protests and the US-China trade deal could increase the value of the American dollar again, pushing the yuan even lower. If the Chinese Yuan continues to fall, it would put a major strain on China’s entire economy.
Chinese international trade is also weakening. In May, exports fell to about 3 percent and imports plummeted almost 17 percent compared to last year. This is the biggest drop in 4 years. A large portion of China’s workforce is in the export industry, but the majority of the international orders were canceled during the pandemic. Official data shows the profits of China’s industrial firms fell almost 30 percent between January and April.