China’s renminbi has fallen to a seven-month low against the dollar as market concerns over slowing domestic growth and shrinking exports have compounded pressure on the currency from rising US interest rates, reports the Financial Times. The Chinese currency has been under pressure since the US Federal Reserve began raising rates last year, pushing yields on US Treasuries above those of their Chinese counterparts and prompting global investors to dump holdings of renminbi-denominated debt.
But the renminbi has continued losing ground this month, even after the US central bank opted to skip an interest rate increase in June. The weakening exchange rate stands to help China’s export-dependent economy, making the country’s goods cheaper to buy for major trading partners.
But it also poses challenges for other Chinese corporates that do business internationally, including highly leveraged property developers with offshore debt that must be repaid in dollars.