Analysis: Improved Capital Returns Key to Sustainable Yuan Strengthening
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While market concerns about an economic slowdown and deflationary pressure lingered following the interest rate cut by the People’s Bank of China in July, the yuan hit a turning point.
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Yuan Strengthens Against U.S. Dollar |
By September, the currency had regained all the value it had lost against the U.S. dollar earlier in the year, nearing 7 per dollar. Why has the yuan strengthened so significantly?

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- The yuan regained value against the U.S. dollar, nearing 7 per dollar by September due to expectations of and the actual U.S. interest rate cut of 50 basis points on Sept. 18.
- This currency strengthening is fueled by shifts in corporate behavior, converting U.S. dollars into yuan.
- For sustainable appreciation, China needs to bolster capital returns and improve corporate profitability through proactive fiscal and monetary policies.
- DH Fund Management Co. Ltd.
- DH Fund Management Co. Ltd. is based in Zhejiang province and focuses on macro strategy. Xu Xiaoqing is its director of macro strategy. The company appears to analyze economic trends and monetary policy impacts, particularly in the context of China's financial market and currency movements.
- July 2024:
- Interest rate cut by the People’s Bank of China.
- By September 2024:
- The yuan had regained all the value it had lost against the U.S. dollar earlier in the year, nearing 7 per dollar.
- Sept. 18, 2024:
- U.S. interest rate cut by 50 basis points.
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