BUZZ-COMMENT-China may not devalue the yuan - merely liberate it
Feb 4 (Reuters) - Much has been said about China keeping its powder dry to deal with Trump's trade tariffs when they hit. The time has come, and one obvious way to counter the broad levy is to weaken the yuan; Beijing might just relax its grip instead.
The People's Bank of China's USD/CNY fixing on Wednesday will be more highly anticipated than usual, as Trump's initial slate of tariffs against China takes effect. It will be the first USD/CNY daily midpoint since onshore markets closed for the Lunar New Year; it was last set at 7.1698 on Jan 27. The U.S. dollar has since surged, driving the offshore USD/CNH to a new record high of 7.3765 on Monday; it currently trades around 7.3080.
The Wall Street Journal reported on Monday that China will propose restoring the 'Phase One' trade deal, and pledge not to devalue the yuan. Whether this occurs is questionable, but it is possible given Trump's deal-making inclinations.
The PBOC could still relax its control of the yuan benchmark on Wednesday, allowing it to move in line with other currencies that have fallen against the dollar. This could be portrayed as leaving the yuan to market forces, though it would in effect weaken it.
The impact could be net-positive for Chinese assets if it's seen as a signal that Beijing is going to step up stimulus measures to mitigate coming U.S. trade barriers.
For more click on FXBUZ
Related Articles
Fed Rate Cut Finally Arrives,Dollar Index: Negative Catalysts Largely Priced In,Euro Rally May Be Running Out of Steam
Tradingkey - The Federal Reserve lowered the target range for the federal funds rate by 25 basis points to 4.00%–4.25% late yesterday, as widely expected, and signaled two additional rate cuts this year.
[U.S. IPO] Netskope Raises $908 Million in IPO, Debuts Thursday: A Rising Star in Cloud Security?
TradingKey - Backed by venture capital firm Lightspeed Venture Partners, Netskope Inc., a technology provider specializing in securing enterprise cloud services, has raised $908.2 million in its IPO. The company's valuation now exceeds $7 billion. Netskope is set to list on the Nasdaq under the tick-24998ce9215f4781a8d3878dba968c9e.jpg)
Why the September Fed Meeting Feels So Strange? The Answer Lies with Miran, Cook and Trump
TradingKey - Beyond analyzing whether the updated dot plot after the Fed’s rate decision reflects a dovish or hawkish tilt, investors are increasingly curious about what will become of the Federal Reserve amid political interference, personnel changes, and potential institutional shifts. The Wall
[U.S. IPO] Oilfield Water Giant WaterBridge Raises $634M in IPO; Can It Repeat LandBridge's 125% Surge?
TradingKey - Oil field water management company WaterBridge (WBI) announced on September 16 that its US initial public offering (IPO) is expected to price 31.7 million shares at $20 per share, raising a total of $634 million.
September Global Central Bank Divergence: How Will U.S. Stocks and Forex Markets Move?
TradingKey - Despite the divergence in monetary policies among major global central banks in September (with the Federal Reserve cutting rates while the European Central Bank, Bank of England, and Bank of Japan maintain steady rates), we expect the policy directions of the Fed, ECB, and BoE to...
