China’s currency is almost the lowest it has ever been in comparison to the U.S. dollar, and no one is quite sure why it has fallen so much. These are some of the theories that have been proposed:
- The Chinese central government and central bank want to slow the decline but aren’t able to.
- Some speculators thought a Trump victory in the U.S. presidential election could boost trade (though the proposed mechanism was not well explained), and a Trump win now seems highly unlikely.
- With exports level or declining, there is less demand for Chinese currency.
- Real estate investors are buying more foreign real estate.
- The Chinese central government and central bank are allowing the currency to decline to support exports and the stock market bubble.