# US Fed rate hike: how can China stem capital outflow and prop up the yuan? | South China Morning Post

> The Fed raised rates 50 basis points to a 0.75 to 1 percent target range, its sharpest hike in over two decades, with more tightening expected. Analysts warn capital will flow back to the US and pressure the yuan, while the PBOC kept its policy rate unchanged and lifted the yuan midpoint.

- Date: 2022-05-05 · published 2022-05-05T12:00:00.000Z
- Category: macro · region China · magnitude medium
- Page: https://feedsoft.ai/events/8315-us-fed-rate-hike-how-can-china-stem-capital-outflow-and-prop-up-the-yuan-south
- Commodities: [Chinese Yuan (CNY per USD)](https://feedsoft.ai/c/USDCNY.md), [US Dollar (Broad)](https://feedsoft.ai/c/DXY.md)

## Why it matters

Capital outflows and yuan depreciation weigh on Chinese feed demand purchasing power, and a firmer dollar tends to pressure dollar-priced grain and meal values.

## Read by commodity

- DXY: bullish ▲
- USDCNY: bullish ▲

## Linked price moves

| Commodity | Date | Window | Change % | z-score | Why linked |
| --- | --- | --- | --- | --- | --- |
| USDCNY | 2022-05-12 | 5 | +2.0% | 3.9 | The Fed's 50bp hike on May 4 and signals of further tightening widened the policy divergence with the PBOC, pushing capital toward USD assets and weakening CNY. |
| USDCNY | 2022-05-12 | 1 | +1.0% | 3.1 | The Fed's 50bp hike and expectations of more tightening widen policy divergence with the PBOC, driving capital outflow and dollar strength that pressure the yuan. |
| USDCNY | 2022-05-09 | 1 | +1.0% | 3.3 | The Fed's 50bp hike and expected further tightening widen the rate differential and encourage capital outflows, which pressure the yuan, though it predates the move by a few days. |

## Similar past events

| Commodity | Date | Event | 5-day % | 20-day % |
| --- | --- | --- | --- | --- |
| USDCNY | 2024-06-28 | [China’s central bank puts the yuan’s exchange-rate swings in crosshairs \| South China Morning Post](https://feedsoft.ai/events/30006-china-s-central-bank-puts-the-yuan-s-exchange-rate-swings-in-crosshairs-south.md) | -0.0% | -0.3% |
| USDCNY | 2016-11-30 | [Robust dollar, tumbling yuan underline need for US-China currency deal \| South China Morning Post](https://feedsoft.ai/events/74061-robust-dollar-tumbling-yuan-underline-need-for-us-china-currency-deal-south.md) | -0.2% | +0.9% |
| USDCNY | 2016-06-27 | [Update \| Chinese yuan slides to 5-year low, pound slumps further in Brexit aftershock \| South China Morning Post](https://feedsoft.ai/events/12457-update-chinese-yuan-slides-to-5-year-low-pound-slumps-further-in-brexit.md) | +0.6% | +1.0% |
| USDCNY | 2016-10-09 | [Flash crash of pound piles pressure on already weak yuan \| South China Morning Post](https://feedsoft.ai/events/5891-flash-crash-of-pound-piles-pressure-on-already-weak-yuan-south-china-morning.md) | +1.0% | +1.6% |
| USDCNY | 2018-10-31 | [China to sell new yuan bills in Hong Kong – a new tool to control the currency now at a 10-year low \| South China Morning Post](https://feedsoft.ai/events/62764-china-to-sell-new-yuan-bills-in-hong-kong-a-new-tool-to-control-the-currency.md) | -0.7% | -0.4% |
| DXY | 2017-09-18 | [Dollar hits seven week high against the yen as Fed meeting on US interest rates eyed \| South China Morning Post](https://feedsoft.ai/events/69174-dollar-hits-seven-week-high-against-the-yen-as-fed-meeting-on-us-interest-rates.md) | +0.4% | +2.1% |
| DXY | 2024-06-28 | [China’s central bank puts the yuan’s exchange-rate swings in crosshairs \| South China Morning Post](https://feedsoft.ai/events/30006-china-s-central-bank-puts-the-yuan-s-exchange-rate-swings-in-crosshairs-south.md) | -0.7% | -0.5% |
| DXY | 2016-11-30 | [Robust dollar, tumbling yuan underline need for US-China currency deal \| South China Morning Post](https://feedsoft.ai/events/74061-robust-dollar-tumbling-yuan-underline-need-for-us-china-currency-deal-south.md) | -0.6% | +1.3% |

## Sources

- scmp.com: https://www.scmp.com/economy/china-economy/article/3176661/us-fed-rate-hike-how-can-china-stem-capital-outflow-and-prop

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Data from Feedsoft AI (https://feedsoft.ai/). For information only; not investment advice.