On 17 May, the value of China’s yuan shrank both domestically and internationally, rising past the key benchmark of 7 to the dollar, another sign that the Asian giant’s economic recovery has stumbled.

The yuan slumped after new data showed manufacturing, retail sales, and investment in fixed assets all grew more slowly during April than analysts had expected, Bloomberg reported.

Also, China’s stock exchanges are rising more slowly than those of other Asian nations and the country’s interest rates are meager compared to those in the U.S.

The yuan has fallen 4 percent from its peak in January “as traders lose patience with the lackluster economic data,” according to Bloomberg.

“We had thought that stronger sentiment, thanks to China’s abrupt reopening and subsequent improvement in some economic data, would strengthen the yuan but this has not materialized,” Kiyong Seong, chief Asia strategist for Société Générale, said to Bloomberg.

“The threshold for a stronger yuan turned out to be much higher than we expected,” he added.

In addition, the People’s Bank of China (PBOC) has sat out the yuan’s slide, making no move to intervene in the currency market.

“With no signs that the [central bank] is making any attempt to push against yuan weakness for now, this has emboldened the bears,” Asia research chief Khoon Goh at Australia & New Zealand Banking Group told Bloomberg.

However, the central bank “has a lot of tools they can employ and market participants will likely be cautious trying to push yuan weakness too far,” he cautioned.

In a March statement, PBOC governor Yi Gang said the bank no longer sees 7 yuan to the dollar as a benchmark and that the bank’s exchange-rate mechanism had become more flexible.

A month later, he said publicly that China is largely done intervening in currency markets. Interventions had discouraged some investors and businesses from entering China.

“The PBOC’s level of concern might not be 7.0 but instead more toward 7.3,” strategists at Nomura Holdings wrote in a research note.

TREND FORECAST: As we have documented in articles, China’s yuan is making inroads against the dollar as a medium of exchange in international trade.

It will continue to do so.

However, China’s ambition to dethrone the dollar as the world’s reserve currency and replace it with the yuan will not be realized until the yuan becomes the global currency of choice for trading oil and its refined products.

That is unlikely to happen in the near future… or until the global shift to renewable energy advances so far that oil markets shrink significantly from their current volumes and/or until commodities (such as oil and the petrodollar) are no longer traded in dollars.