The People's Bank of China has begun conducting surveys among financial institutions to study the impact of dollar weakness on the yuan and the Chinese economy.
Market Responds to Dollar Weakness
Recent data shows that the U.S. dollar is facing tough times. The Dollar Index, which tracks the performance of the currency against six major currencies, has dropped 11% so far this year – the worst start since 1973.
Yuan Remains Steady
While the dollar is decreasing, the yuan has maintained relative stability, gaining around 1.3% during the same period. This can be seen as a positive sign for consumers and importers, but it puts pressure on Chinese exporters.
Survey as a Prelude to Policy Changes
Although the survey conducted by the PBOC may not lead to immediate policy changes, it could be a first step towards managing the value of the yuan. The PBOC has a history of using subtle methods to regulate the yuan's status without direct intervention.
Thus, in light of the weakening dollar and the yuan's stability, the PBOC is actively exploring market sentiments, which may indicate potential changes in China's economic policy.
