‘The weak yuan trading this week is related to the fact that the United States dollar is trading strongly against other currencies with the expectation of the USA interest rate rise next month.
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Economists estimate the Chinese yuan is undervalued by anywhere from 15 percent to 40 percent.
Today is the eighth day, Yuan depreciated against Dollar making it one of the longest stretch in history and just shy of its all-time record of 10 consecutive days of depreciation back in 2008, since the currency was de-pegged back in 2005.
U.S.-China relations have been deteriorating as of late, with diverse issues including the U.S.-China trade imbalance, China’s devaluation of the yuan, Chinese cybercrime against the US, and China’s increasingly aggressive moves against its neighbors all playing a part.
“The role of the yuan as an worldwide currency is strengthening, based on the larger number of companies that use the RMB to settle payments, as well as the number of banks that accept payments in the currency”, said Epstein.
As annual growth of 6.5% would be required every year for China to double 2010 GDP, and the per capita income of both urban and rural residents and “build a moderately prosperous society” by Y 2020, analysts expect more pro-growth measures soon.
“China’s currency is increasingly competing against the dollar and the euro, and is advancing in the right direction so that tomorrow it can be considered as a complete currency”, Epstein concluded.
But the rising yuan has eroded China’s economic advantage over the rest of the world. The trade surplus expanded by 75.3 percent to 2.99 trillion yuan. This does not reflect that retail spending has been growing substantially.
The move will lower trading costs for China and Switzerland, facilitate use of the two currencies in bilateral trade and investment and boost economic and financial cooperation between the two countries, according to the CFETS.
Trump’s column and policy paper go into much more detail than he has in the past, but did not impress Yukon Huang, senior associate at the Asia program at the Carnegie Endowment for global Peace.
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Trump says that under his administration if he’s elected, “trade will flourish” because he will ensure that free trade is also “fair trade”.
