The Chinese yuan has experienced another significant devaluation.

After breaking through the 7.2 mark a few days ago, it has now fallen below 7.27 as of yesterday, and it's getting closer to the previous low of 7.37.

Moreover, in the last three trading days, capital from the north has been continuously flowing out, with increasing scale.

The net selling on Tuesday was 2.6 billion yuan, which increased to 4.07 billion yuan on Wednesday, and further expanded to 7.6 billion yuan on Thursday.

In just three days, the net selling of capital from the north reached 14.2 billion yuan.

Are overseas funds beginning a significant retreat?

The devaluation of the yuan since last April is closely related to the Federal Reserve's interest rate hikes that began in March of the same year.

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The extremely irresponsible financial policies of the U.S. government, especially during the outbreak of this disease, have been continuously printing money and opening the floodgates, ultimately leading to the highest inflation rate in the U.S. in forty years, with the CPI reaching 9.1%.

Although the Federal Reserve was initially reluctant to raise interest rates, they eventually had no choice but to do so, and the magnitude of the rate hikes has been increasing.

The significant rise in U.S. dollar interest rates has had a tremendous impact on the global economy: as the Federal Reserve raises rates, the dollar appreciates, capital flows back, and the interest rate differential widens further.

During that period, the U.S. dollar index soared from 94.62 to 114.8, with the maximum increase being 21.3%, causing the major currencies of the world to fall sharply against the dollar.

However, the onshore yuan exchange rate, although it fell significantly from 6.3 to 7.37, with a decline of 16.9%, was less than the increase of the dollar.

In contrast, the Japanese yen's exchange rate against the dollar fell from 113 to 159, with a decline of 40%, far exceeding the increase of the dollar.

However, the trend of the yuan since the beginning of 2023 seems to be not optimistic.

The depreciation from 6.7 to the current 7.27 is significantly greater than the appreciation of the dollar.

Perhaps this is related to the need to consider exports comprehensively.

Starting in November last year, the yuan experienced a significant rebound, but it was very coincidental that in the fourth quarter of last year, China's exports fell year-on-year.

Until March and April of this year, our exports have clearly warmed up, whether it is the year-on-year increase in export volume or the expansion of the trade surplus, which coincides with the depreciation of the yuan during this period.

Currently, there has been no obvious intervention by the authorities in the trend of the yuan exchange rate, which means that the benefits of the depreciation during this period are that exports are much better than in the fourth quarter of last year.

Of course, the status of the yuan and the short-term fluctuations in the exchange rate are not very related, even if the exchange rate has depreciated during this period, the international community's demand for the yuan continues to grow.

The latest news is that the Central Bank of Argentina has approved the opening of yuan deposit accounts in banks within Argentina, which means that ordinary residents of Argentina will also be able to deposit in yuan in banks, just like residents in Russia.

Prior to this, the status of the yuan had already been highly recognized by Russia.

A Russian bank executive said in an interview: The yuan will definitely occupy a dominant position in Russia's future foreign exchange savings.

This means that the yuan will surpass the status of currencies such as the dollar in Russia in the future.

The executive also asserted that by next year, the yuan could account for nearly half of the foreign exchange savings of residents in Russia.

Now, Russian banks are conducting a large amount of yuan deposit business.

The improvement of the yuan's status in various countries is not accidental, but is supported by the long-term credibility of the yuan.

In contrast, the dollar itself has a great advantage as a common currency.

However, due to the European energy crisis and the Russia-Ukraine conflict last year, Russia was severely trapped by a few countries led by the United States, and Russia simply gave up the dollar for trade settlement.

Unexpectedly, this has brought a good demonstration effect for the de-dollarization of countries around the world.

Now, more and more countries hope to choose a stable and safe currency to avoid risks.

The yuan is the currency that best meets the standard.

So overall, it seems that the yuan exchange rate may still fluctuate at the current low level, but there will be no greater room for depreciation.

At the same time, the international community's demand for the yuan will continue to increase, which is not related to the trend of the exchange rate.

Overseas funds will not show a significant outflow, but the inflow will be increasing.