China's yuan hits 18-month low against the dollar as Beijing's Covid lockdowns drag economy and US bond yields climb

• The yuan fell 1% against the dollar Monday to hit its lowest point since November 2020.
• China's economy continues to face headwinds, with Covid lockdowns hindering growth.

China's yuan fell 1% against the US dollar Monday to its lowest point in 18 months as strict Covid lockdown policies imposed by Beijing weigh on economic growth prospects.

The yuan's onshore price slipped to 6.7321 against the dollar, the worst exchange rate since November 2020, continuing a sell-off that saw the the Chinese currency tumble 4% in April.

The depreciation comes as a hawkish Federal Reserve sends bond yields in the US above those in China, while fresh data showed export growth slowing. Additionally, sentiment has been weighed down because state-owned banks haven't sold off dollar holdings, sources told Bloomberg.

China's central bank is moving to slow the yuan's slide, as it set the currency's reference rate above expectations for a fifth day on Monday.

The People's Bank of China also cut the foreign-currency reserve ratio last month in an effort to increase the supply of dollars and boost the yuan.

Coinciding with the yuan's recent drop is a decline in its share of global transactions in April to its lowest point since November 2021.

During the same time, the dollar carried on as the most used currency for the 10th straight month, per SWIFT data, as businesses flocked to the traditional safe-haven currency. It accounted for 41.1% of all SWIFT transactions — it's highest rate since April 2020.

Nonetheless, experts have speculated in recent months whether the dollar's dominance is waning, and whether the yuan stands a chance of supplanting it. Skeptics say Beijing isn't ready to take on the responsibility of being a primary reserve currency, and that Chinese markets see too much chaos.