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Chinese currency approaches levels seen early in the year Investors think that a 7-to-1 exchange rate is envisaged as the Chinese economy begins to protect itself
Will China trigger a currency war against the dollar?
The action would be in retaliation against Trump's tariffs, with a weaker yuan for the Chinese exporters . that the weakness of the yuan has about as much to do with the tightening of the Fed and the reduction of its balance sheet as the People's Bank of China moving the needle on its floating trading band managed.
Some global investors think the yuan is going up 7.25, especially if the dollar continues to strengthen.
"If the dollar continues to strengthen and gold pbades below $ 1200 an ounce, you should not be surprised to see the yuan pbad r to seven more. The correlation between them is so strong, "says Vladimir Signorelli, a macro investment badyst at Bretton Woods Research in New Jersey.
The Chinese yuan is trading in a four percent band in either direction. the central bank will take the high point and make it the start of a new price range of 4%, down 8% since April and 4% since the beginning of the year.
[] 19659005] "We expect a moderate depreciation of the yuan in the short term," said Richard Turnill, chief investment strategist at BlackRock in New York. "Chinese authorities manage conflicting strategic objectives in a difficult environment," he says [19659005TheFedistighteningandnarrowingitsbalancesheetwhichreducesthenumberofdollarsavailablewhichispositiveforbullsbutitalsomakesUSexportsmoreexpensiveInAsiaandelsewheretheweakeningoftheyuanat680onMondaymorningisacombinationofthestrengthofthedollarandaslowerChineseeconomy
The yuan has already reached this level. He tested 6.90 at the beginning of the year. The Chinese currency weakens since the election of Donald Trump.
China is in semi-panic mode. They reduce taxes, reduce interest rates and initiate tax policy changes to stimulate the economy, while anticipating tariffs.
Turnill said that he does not see China resort to a devaluation of 2015 to amortize tariffs. Although his calculation at this time is based on the $ 50 billion of tariffs adopted this month. Trump threatens more than $ 200 billion in tariffs, which would bring trade war to Defcon 4.
U.S. Treasury Secretary Steven Mnuchin is giving a press conference at the G20 Finance Ministers and Central Bank Governors Meeting in Buenos Aires, Argentina on Sunday, July 22, 2018. Finance Ministers and Central Bank Heads of Finance G20 meet in Buenos Aires. The trade policies of President Donald Trump and the potential impact of a currency war. (AP Photo / Gustavo Garello)
View: China's dead cat bounces? – Forbes
Here's How China Protects From a Trade War – Forbes
Sorry, Bill Maher. U.S. GDP is expected to grow in China to 5% – Forbes
In 2015, a lack of market confidence in Chinese monetary policy contributed to the flight of capital, frightening global markets. Subsequently, China announced that it was changing its fluctuation band for the yuan in anticipation of its joining the International Monetary Fund's currency basket, special drawing rights.
China has put in place stricter capital controls among policymakers. For Turnill, this should give confidence to the government to allow the yuan to fall gradually.
"A sharp depreciation of the yuan would undermine Beijing's deleveraging effort, causing capital flight and further tightening domestic financial conditions." "It could also fuel inflation and curb the growing interest of foreign investors in Chinese stock and bond markets."
A shares of mainland Chinese companies are down more than 20% from the record highs of January 26th. The CSI-300 China A-Shares Exchange Traded Fund (ASHR) is down Monday and 17.5% since the beginning of the year.
The US Treasury does not consider China as a currency manipulator. Therefore, any weakness of the yuan is more likely a movement in the market than the intervention of Beijing's central bankers.
President Trump said last week that the falsity of the Fed made the dollar uncompetitive. Unsurprisingly, Fed officials reject any interference in their independence and say that monetary policy is not a mystery.
The Fed meets again next week and markets are expecting a 25 basis point increase. This is likely to lower emerging market currencies, including those of China.
The market is expecting a further rise in rates this year, three more next year and one more in 2020.
Trump noted that as a "stone", which implies China is handling the currency, Treasury Secretary Steve Mnuchin says the United States will investigate whether the recent depreciation of the yuan is the result of manipulation and that the results will be presented in the usual semi-annual Treasury report in October.
imports, which makes the yuan even more bearish than the Fed's monetary policy
"The trade war continues to worsen," said Neil MacKinnon, an economist at VTB Capital. what looks like a pure and simple currency war, "he says.
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The Chinese currency approaches levels seen at the beginning of the year, investors believe that an exchange rate of 7 to 1 is envisaged. The economy of China is starting to protect itself from a trade war.
Will China unleash a currency war against the dollar?
The action would be in retaliation against Trump's commercial tariffs, with a lower yuan better for Chinese exporters. The problem is that the weakness of the yuan has about as much to do with the tightening of the Fed and the reduction of its balance sheet as the People's Bank of China moving the needle on its managed floating trading band.
think the yuan is going to 7.25, especially if the dollar continues to strengthen.
"If the dollar continues to strengthen and gold goes below $ 1200 an ounce, you should not be surprised to see the yuan move to seven. The correlation between them is so strong, "says Vladimir Signorelli, a macro investment badyst at Bretton Woods Research in New Jersey.
The Chinese yuan trades in a four percent band in both directions. the central bank will take the climax and make it the beginning of a new price range of 4% The currency is down 8% since April and 4% since the beginning of the year [19659038] "We observe a moderate depreciation of the yuan" The Chinese authorities are managing conflicting strategic objectives in a difficult environment, "he says.It is a good thing for the dollar bulls, but it also makes US exports more For China, considered a competitor of American companies in Asia and elsewhere, the yuan weakened at 6.80 on Monday morning, a combination of the strength of the dollar and a slower Chinese economy.
The yuan was at this level before it tested 6.90 early in the year The Chinese currency has weakened since the election of Donald Trump. ]
China is in semi-panic mode. t taxes, reduce interest rates and initiate tax policy changes to stimulate the economy, while anticipating tariffs.
Turnill said that he does not see China resort to a devaluation of 2015 to amortize tariffs. Although his calculation at this time is based on the $ 50 billion of tariffs adopted this month. Trump threatens more than $ 200 billion in tariffs, which would bring trade war to Defcon 4.
U.S. Treasury Secretary Steven Mnuchin is giving a press conference at the G20 Finance Ministers and Central Bank Governors Meeting in Buenos Aires, Argentina on Sunday, July 22, 2018. Finance Ministers and Central Bank Heads of Finance G20 meet in Buenos Aires. The trade policies of President Donald Trump and the potential impact of a currency war. (AP Photo / Gustavo Garello)
View: China's dead cat bounces? – Forbes
Here's How China Protects From a Trade War – Forbes
Sorry, Bill Maher. U.S. GDP is expected to grow in China to 5% – Forbes
In 2015, a lack of market confidence in Chinese monetary policy contributed to the flight of capital, frightening global markets. Subsequently, China announced that it was changing its fluctuation band for the yuan in anticipation of its joining the International Monetary Fund's currency basket, special drawing rights.
China has put in place stricter capital controls among policymakers. For Turnill, this should give confidence to the government to allow the yuan to fall gradually.
"A sharp depreciation of the yuan would undermine Beijing's deleveraging effort, causing capital flight and further tightening domestic financial conditions." "It could also fuel inflation and curb the growing interest of foreign investors in Chinese stock and bond markets."
A shares of mainland Chinese companies are down more than 20% from the record highs of January 26th. The CSI-300 China A-Shares Exchange Traded Fund (ASHR) is down Monday and 17.5% since the beginning of the year.
The US Treasury does not consider China as a currency manipulator. Therefore, any weakness of the yuan is more likely a movement in the market than the intervention of Beijing's central bankers.
President Trump said last week that the falsity of the Fed made the dollar uncompetitive. Unsurprisingly, Fed officials reject any interference in their independence and say that monetary policy is not a mystery.
The Fed meets again next week and markets are expecting a 25 basis point increase. This is likely to lower emerging market currencies, including those of China.
The market is expecting a further rise in rates this year, three more next year and one more in 2020.
Trump noted that as a "stone", which implies China is handling the currency, Treasury Secretary Steve Mnuchin says the United States will investigate whether the recent depreciation of the yuan is the result of manipulation and that the results will be presented in the usual semi-annual Treasury report in October.
imports, which makes the yuan even more bearish than the Fed's monetary policy
"The trade war continues to worsen," said Neil MacKinnon, an economist at VTB Capital. next to what looks like a currency war, "he says.
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