The clear safe haven role the yuan is playing as Russian forces devastate Ukraine is Xi Jinping’s to lose.
As the euro, South Korean won and other major currencies slide, the yuan is seeing solid demand, trading near four-year highs. Along with the yuan “trading like a safe haven currency,” economists at Australia & New Zealand Bank point out, prospects for a solid Chinese recovery are giving mainland equities a bid relative to US stocks.
Can the yuan’s status as a refuge currency last? Yes, so long as President Xi Jinping gives Beijing’s reformist faction more room to raise China’s financial game.
Generally speaking, this has been the case for the last 20-plus years, but particularly the last decade. Though Deng Xiaoping set China on the path it’s traveling this week, it was upgrades implemented on President Jiang Zemin’s watch between 1993 and 2003 that truly internationalized the economy.