As The Chinese Stock Market Hits New Lows, So Does Its Currency

by on

Chinese stock shares plunged in June, raising worries of a slowdown in the world’s largest commodity user. Shares bounced back after the sharp decline, but that bounce didn’t last long.

Free Sample Report: Our New Monthly Metal Price Outlook

Investors’ sentiment haven’t turned positive yet, sending Chinese stocks to fresh lows.

FXI China ishares since 2014

FXI China ishares since 2014. Graph:  MetalMiner analysis of stockcharts.com data.

Policy makers in China are trying everything to boost the economy. Last week China unexpectedly devalued its currency. Ever since then, though, the currency has kept on depreciating against the dollar, the exchange rate is now at ~6.4 $/¥, the highest rate since 2011.

Yuan per dollar since 2011

Yuan per dollar since 2011. Graph: MetalMiner analyis of Yahoo Finance Data.

But it seems like those concerns about China’s economy have just been bolstered by the currency devaluation. It’s clear that investors are very nervous about what’s happening in China and they are taking all these measures to boost the economy as desperate attempts to stop a negative tide.

What This Means For Metal Buyers

These developments are just exacerbating the bearish commodity market and, even more significantly, industrial metals, which are suffering serious declines lately.

 

Leave a Comment

Your email address will not be published. Required fields are marked *