While the yuan exchange rate has exceeded the psychological margin of 7 yuan per dollar, the standard exchange rate, which is thought to reflect the government's management of exchange rate, has exceeded the 7 yuan per dollar in 11 years.

The Bank of China, the People's Bank of China, posted a median exchange rate of 8.0039 yuan, up 0.06% from the previous day's 6.9996 yuan.

The median exchange rate has exceeded 7 yuan per dollar in 11 years since May 2008, when the global financial crisis was underway.

The yuan exchange rate in the foreign exchange market has already reached more than 7 yuan per dollar for four consecutive days since the 5th.

The weakening yuan is largely due to deepening trade conflicts between the US and China and concerns about a slowing Chinese economy.

However, some analysts say China is countering the bearish counterattack in that it has not seen a strong foreign exchange market defense in order to protect the yuan line of 7 yuan per dollar, which is considered a marginal line in the market.

In the meantime, there have been some observations that the People's Bank may be able to weaken further yuan if the official exchange rate is above 7 yuan per dollar.

In the Chinese regional market, the renminbi is traded in the range of 2% above and below the interim exchange rate.

The market observes the exchange rate announced by the People's Bank as a signal of the Chinese government's exchange rate policy.

In fact, the People's Bank announced a median exchange rate of 6.9225 yuan per dollar on May 5 after a `` poch '' where the yuan exchange rate against the dollar exceeded 7 yuan.

When the People's Bank raised the interim yuan against the dollar for more than 6.9 yuan for the first time this year, the market interpreted the Chinese government as sending a 'poch' concession, and as the market exchange rate soared, the yuan per dollar quickly collapsed.

However, since the exchange rate reflects the market exchange rate of the previous day, there is a view that the intermediate exchange rate was also lagging since the market exchange rate has already exceeded 7 yuan per dollar.

As of 10:00 am (local time), the yuan exchange rate against the dollar was forming at 7.06 yuan and 7.04 yuan, respectively, in the offshore and onshore markets.

It is pointed out that the weak yuan is like a double-edged sword in China.

Tolerating the weaker yuan may help Chinese exporters amid rising observations of a prolonged conflict with the United States.

However, the rapid yuan weakness is also a big risk, as it can have serious side effects, such as massive capital outflows and the collapse of the stock market.

(Photo = Getty Images Korea)