China's yuan move

China is trying to strengthen the weakening yuan with the daily reference exchange rate weapon. The People's Bank of China set the yuan fix at 7.2006 per dollar. The expectation in a Bloomberg survey of traders and analysts was 7.3047. This marked the largest difference between the expectation and the realized fix since 2018. Chinese authorities have tried to stop the bleeding of the yuan this week, while both offshore and onshore yuan reached their weakest levels in recent years under the shadow of weak economic data and sharply falling housing prices. Xiaojia Zhi, Research Manager at Credit Agricole CIB, stated that the rapid yuan depreciation was damaging confidence and risk appetite, and said, “It is important for the People's Bank of China to take action at a time when debt concerns are increasing and economic confidence is particularly weak.” On the other hand, the number of Chinese state-owned real estate companies that are losing money on their balance sheets is also increasing. While 11 companies listed on the Hong Kong Stock Exchange reported losses in the first six months of 2022, this number increased to 18. Two years ago, only four companies were reporting losses.