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No need to be ‘overly pessimistic’ over yuan-US dollar exchange rate: Ip

Due to the impact of the Sino-US trade war, the yuan’s exchange rate would float in the short run.

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UPDATED: 22 Dec 2023, 5:46 am

Macau Association of Banks (ABM) President-cum-lawmaker Ip Sio Kai told reporters on Thursday that due to the impact of the Sino-US trade war, the yuan’s exchange rate would float in the short run, adding that the yuan has the nation’s strong support so there was no need to be “overly pessimistic” about the national currency’s exchange rate, according to a report by government-owned broadcaster TDM.

Ip talked to the media on the sidelines of a plenary session in the Legislative Assembly.

The exchange rate between the yuan and the US dollar exceeded 7 yuan this week. The rate stood at 7.0456 yuan US$1 last night, according to Reuters.

Ip told reporters that he predicted the exchange rate would float between 6.8 to 7.3 in the remainder of the year, adding that the depreciation of the yuan had “pros and cons” for Macau. However, he admitted that the “cons” were greater than the “pros”, the report said.

The pataca is indirectly pegged to the US dollar through the HK dollar.

According to the report, Ip noted that the “pros” would be that the yuan could flow into the Macau and Hong Kong special administrative regions to lower the risk of currency depreciation and thereby increase the savings of patacas in the local banking system.

Ip underlined that the “cons” would be that the depreciation of the yuan could negatively affect the willingness of mainland tourists travelling to Macau, therefore bringing negative factors to the local tourism and gaming industries’ operations.

One yuan was worth 1.15 patacas last night.

According to the Macau Post Daily, Ip told reporters that with the increasing numbers of unilateral measures taken by the US in the Sino-US trade war, the exchange rate of the yuan could continue to float in the short run, and he warned the public that the US’s action could bring short-term shocks to the yuan’s exchange rate.

UPDATED: 22 Dec 2023, 5:46 am

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