Investors believe in Asian currencies due to economic recovery and vaccine

Chinese yuan is the most popular currency, yet other Asian currencies also seem to be interesting alternatives to the US dollar. Simply put, investors believe that the second largest economy is out of the worst.


The interest in Chinese yuan and other main Asian currencies is caused mostly by the fact that China’s economy reported better than expected results for second quarter of 2020. In comparison to last year, the currency increased in 3.2%. Similarly, foreign trade statistics signal that second quarter of this year could be almost exceptional for the world’s second strongest economy. China might be profiting from fiscal policy implemented by its government. 

Second factor affecting yuan demand is represented by positive news on a coronavirus vaccine progress. In case vaccine was developed in near future, it could serve as a strong signal for trust in global economy. The current uncertainty and the danger of coronavirus second wave stifles hope of fast economic recovery. Nevertheless, investors feel that Asia is that part of the world, where economic recovery could both soon come and remain. 

Last but not least, yuan is pushed by China‘s covered interest differential compared to other large economic centers. 



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