Yuan at 14-Month High as Fed-BOJ-PBOC Split — Crypto Impact

China's yuan reached a 14-month high against the dollar, adding complexity to the macro environment for risk assets like cryptocurrencies. This divergence stems from the world's three largest central banks moving differently: the Fed delivered a hawkish rate cut, the Bank of Japan (BOJ) is expected to hike rates, and the People's Bank of China (PBOC) is managing yuan strength amid domestic economic slowdown. The yuan's surge was attributed mainly to broad dollar weakness and year-end exporter demand, despite the PBOC setting a fixing weaker than market estimates to slow appreciation. The looming BOJ rate hike raises concerns about unwinding the yen carry trade, which previously caused sharp crypto selloffs. Meanwhile, the Fed's recent cut was hawkish, signaling fewer future cuts. For crypto, dollar weakness is generally supportive, but potential liquidity contraction from yen carry trade unwinding could offset gains, evidenced by slowing spot Bitcoin ETF inflows.

(Source：BeInCrypto)