It’s been a summer to forget for the Chinese yuan so far this year. Although the currency reversed earlier losses against the dollar earlier today after the PBOC raised the reserve requirement on FX forwards from 0% to 20%, it is still on pace to finish lower against the dollar this week for the eighth straight week. Looking at a long-term chart of spot USDCNY shows how even after the dollar’s big rally this summer, it still remains below the levels it traded at relative to the yuan back in late 2016 when it peaked at just under 7.0. As of this writing, USDCNY is trading at 6.8348 but is down from earlier highs 6.8972.

While the dollar has not quite reached new highs against the yuan in this most recent leg higher, the speed of the move is noteworthy. Over the last eight straight weeks of gains for the dollar relative to the yuan, it has rallied 6.68%, which is by far the largest eight week gain in USDCNY since at least 2010.  What’s also worth pointing out, though, is that this extreme eight-week rally in USDCNY immediately followed what was an extreme eight-week decline! If nothing else, the currency pair has become a lot more volatile in 2018. We’ve been discussing the recent moves in China’s currency and how it relates to trade in detail on a near daily basis in our various reports.