Why Has the Chinese Yuan Been So Strong, Will it Last, and What Does it Mean for the US?

Since May 2020, the Chinese Yuan has defied the path of other emerging market currencies, strengthening by almost 12%.

This has left it overvalued compared to other emerging market countries.

While Yuan strength made sense in 2020 when the USD was weakening. It is curious that in 2021, both the USD and CNY strengthened simultaneously.

This is statistically possible because of the relatively small weight (3%) of the Chinese Yuan in the Bloomberg Dollar Spot Index.