Barclays says there is a fall ahead =for the yuan, that markets have not yet ‘priced in’ higher tariffs.
- see fundamental reasons for the yuan to fall
- says the yuan has resilience since the US election, but “Despite this,
we expect continued pressure on China’s balance of payments
dynamics owing to tariffs” - scope for large-scale
trade diversion is much more limited compared with Trump’s first term - China is still facing deflation, weak domestic
demand and a troubled real estate market - “We think the
PBOC will react to tariffs by depreciating the CNY given the lack of
other options, but could wait for further clarity before acting”
This article was written by Eamonn Sheridan at www.forexlive.com.