China Recently Announced Downgraded Covid-19 Regulations, Dollar Unchanged

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The dollar held steady on Tuesday despite an uptick in COVID cases thanks to China’s announcement that it will no longer require entering visitors to be quarantined for COVID-19.

China will no longer require new entrants to spend time in quarantine beginning January 8, according to a Monday announcement from the National Health Commission. Additionally, Beijing dropped the COVID case management limits from Category A, which was the strictest, to Category B, which is the laxest.

The offshore yuan decreased by 0.13% to $6.9653 per dollar.

“We’ve been in a very narrow trading range, and I think with the dollar firming up against the euro and yen, we could see further dollar gains against the Chinese currency,” remarked Marc Chandler, Bannockburn Global Forex’s chief market strategist.

The unveiling of strict Covid restrictions can hurt China’s economy right now, yet long term, it can bring the country back on its feet again. Additionally, it may provide further support for the euro, which has climbed higher due to the European Central Bank’s considerably tougher stance on inflation than investors had anticipated.

While the New Zealand dollar gave up earlier gains and slipped by 0.17% to $0.628 over the holiday season, the Australian dollar increased by 0.18% to reach $0.674 against the US dollar. The two currencies are widely used as liquid alternatives to the Chinese yuan.

Because UK markets were closed for a holiday, there was little activity in the sterling market, which caused the pound to decline against the dollar and now trade at about $1.2031.

The US dollar index was just down 0.1% at 104.18.

According to data released on Friday, consumer spending in the United States barely grew in November while inflation continued to fall, encouraging hopes that the Federal Reserve may scale down its hardline tightening monetary policy.

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