Bitcoin Price Leaps to $745 as Chinese Yuan Reaches Eight-Year Low

| Updated
by Tatsiana Yablonskaya · 3 min read
Bitcoin Price Leaps to $745 as Chinese Yuan Reaches Eight-Year Low
Photo: Kaleigh Johnson-Cover/Flickr

Overnight, the Yuan dropped to the lowest point since December 2008, and experts predict further declines.

Investors have lately increased their interest in bitcoin, which explains the recent price rise. Indeed, Chinese investors are driving the price up even further.

In fact, lady luck turned a blind eye to Chinese Yuan right now. As the currency reached its eight-year low overnight, concerns of investors are growing. At the same time, the US dollar continues its bullish run throughout 2016.

Chinese banks slashed their forecasts for the exchange rate as well. A Federal Reserve interest rate hike is driving the Yuan down, and further lows are expected. A US dollar appears to be in a stronger position comparing to a weakening yuan. The situation forces banks to lower their forecasts. As for now, at least five major banks have already lowered projections, and others are more than likely to join over time.

Now, anyone dealing with Yuan must be on the anxious seat. The situation looks rather disappointing and continues getting worse.  Overnight, the Yuan dropped to the lowest point since December 2008, and experts predict further declines.

“The pressure for the yuan to decline could be stronger next year as Trump’s policies could lead to a dollar rally and amid concerns about China-U.S. trade relations. The People’s Bank of China can curb high volatility with stronger fixings and intervention, but it won’t do so unless outflows surge, as such measures could add great pressures to the foreign reserves”, Harrison Hu, RBS Group PLC’s Chief Greater China Economist, says.

Experts predict that current situation will result in further capital outflows in China, making the economic picture even worse.

According to NewsBTC, US$44.7bn worth of yuan payments exited the Chinese economy in September of 2016. Plugging loopholes to circumvent capital controls have been undertaken, yet provide little relief so far. Interestingly enough, the Chinese government focuses on Bitcoin transactions used to move funds out of China.

It is hardly likely now that the People’s Bank of China will take measures to artificially stabilize the yuan exchange rate. Such actions might give Donald Trump more ground to call China a currency manipulator. The newly-elected US President has repeatedly accused China of deliberately devaluing the yuan as a means to facilitate its exports in making them more competitive in the global market. A very tense situation for residents and investors, that much is certain.

Just as the results of presidential elections in the USA were announced, bitcoin price rose. Trump has never announced much support to bitcoin during his recent campaigns. However, he has cast projected his persona as a Washington outsider, which can boost uncertainty and finally lead to an increased interest in alternative assets.

Bitcoin News, Blockchain News, Cryptocurrency News, News
Tatsiana Yablonskaya

Taking strong interest in blockchain, cryptocurrencies, and IoT, Tatsiana Yablonskaya got deep understanding of the emerging techs believing in their potential to drive the future.

Related Articles