The central parity rates of the Chinese currency renminbi and 24 other major currencies were revealed by the China Foreign Exchange Trade System this Monday. The parity rate of the US dollar against the yuan, in particular, was based on a weighted average of prices in the market before the opening of the interbank market per business day.
The currency unit's central parity rate in yuan for the US dollar was at 708.65. Investors were in doubt as to whether they still found the US dollar to be traded at a safe-haven risk premium over fears of a potential second wave of virus infections in the country.
According to the chief executive of Asia macro strategist in Deutsche Bank Sameer Goel, the currency markets are still facing 'multiple cross-currents' over the second wave of virus infections in the US. He claimed that the potential resurgence could weaken the US dollar currency against those of developed markets, including China.
His comments came after the US government reported that there was a spike in cases over the weekend. There have been more than 30,000 new cases last Friday and Saturday, which was pegged as the highest daily totals since May 1, reported John Hopkins University.
There was also a showing of investor concern after a recent detection of clustered infections in China's capital Beijing. Hence, there was also a showing of a possible resurgence of virus cases in the region.
This afternoon, the US dollar index stood at 97.503 against its major competitors. Earlier this month, it was trading at levels below 96.5. Despite the decrease in investor confidence, the US dollar was favored by investors last March against ten countries. The behavior was then referred to as an 'emergency dollar demand' when the global economy went into a synchronized shutdown.
Goel added that investors typically prefer the US dollar in times of uncertainty. The choice was said to be caused by the belief that the currency is the world's reserve. However, Goel said that its reputation might be waning due to the pandemic.
Based on the yuan, the Euro was at 792.09, the Japanese yen at 6.634, the Hong Kong dollar at 91.435, and the British pound at 874.63. The Australian dollar was at 483.28, the New Zealand dollar at 453.64, the Singaporean dollar at 5.06.72, and the Swiss franc was at 744.05. Finally, the Canadian dollar stood at 520.34, the Malaysian ringgit at 60.308, the Ruble at 981.52, the Rand at 245.74, and the UAE dirham at 51.832, among others.