China's Yuan Threatened As Capital Flight Worsens Due To Ukraine
China’s yuan is under extreme pressure amid unprecedented capital outflows following the Russian invasion of Ukraine, Amanda Lee and Wendy Wu reported for South China Morning Post (SCMP).
Photo Insert: Investors have pulled money out of China on a huge scale even as flows to other emerging markets held up.
Lee and Wu said investors have pulled money out of China on a huge scale even as flows to other emerging markets held up, the Institute of International Finance (IIF) revealed, indicating that capital is avoiding Beijing as it sides with Moscow’s invasion of Ukraine.
Analysts expect fund outflows in yuan-denominated assets to remain volatile in the coming weeks, raising concerns about how authorities will manage the yuan. IIF said the yuan will likely face more pressure in coming months.
High-frequency data detected large portfolio outflows from Chinese stocks and bonds, even as flows to other emerging markets held up, the IIF wrote in a report on Thursday, Mar. 25, 2022.
“Outflows from China on the scale and intensity we are seeing are unprecedented, especially since we are not seeing similar outflows from the rest of emerging markets,” said the IIF report.