Three state financial newspapers in Shanghai and Beijing said in front-line comments on Tuesday that investors should avoid Chinese currency risk and adapt to higher foreign exchange volatility, after more than a week of strong gains by the yuan.
The currency may have strengthened, but this year it would be volatile in both directions, they warned.
Since the newspapers delivered the same message on the same day and on their front pages, they had almost certainly been directed by the government to do so.
The yuan has risen 2.2% against the dollar this year, hitting an almost five-month high on Tuesday and reversed much of 2022's annual loss, the biggest in 28 years. The Securities Times said that even if the depreciation pressure has decreased, two-way volatility in the yuan exchange rate will still be the norm in 2023.
The current account surplus and yield gap between China and the United States will keep adding pressure on the yuan, it warned.
The newspaper, from Beijing, and the two others, urged investors to adopt risk neutrality in foreign exchange.
The Federal Reserve's raising of interest rates and the resulting strength of the dollar were a factor that weighed on the yuan in 2022, since higher U.S. yields attracted money to dollar-denominated assets.
Markets believe that the U.S. central bank will hike interest rates at its next few meetings until inflation has peaked.
The yuan's value is influenced by improvements in China's economic expectations, according to the China Securities Journal of Beijing.
The newspaper said that the yuan will likely continue to be subject to two-way volatility after a reasonable correction, gradually converging towards a reasonable range in the long run.
The value of the yuan would be determined by domestic factors this year, according to the Shanghai Securities News. The pace of improvements in economic fundamentals would be the focus.
Recent economic indicators, including December factory activity, have suggested that surging COVID- 19 infections following the removal of social restrictions disrupted production in December and weighed on demand.
For the fourth quarter and 2022, a number of investment banks, including Nomura and JPMorgan, have downgraded their estimates for Chinese gross domestic product.