China’s economy rebounds and interest rate differentials

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China’s economy rebounds and interest rate differentials

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

China’s Economy Rebounds, Yuan Strengthens

  • China’s economy rebounds from pandemic fallout.
  • Chinese yuan has rallied against the US dollar.
  • New loans for infrastructure projects fuel the comeback.
  • Chinese demand has helped to rally copper.
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Interest Rate Differentials and the Demand for US Dollar

  • Interest rate differentials tend to vary with how they are measured.
  • Measures include central bank, interbank, overnight index swap, and FX rates.
  • FX market tends to show a higher US dollar rate against other currencies.
  • The higher rate in FX markets could be due to global demand for US dollars.
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