USD/CNY has now jumped to 7.30 at its highest in eight weeks. And if anything, it once again shows how Beijing might choose to respond towards Trump's latest tariffs announcement.
Here's the full list tariff war declarationTrump slams China with a 54% tariff rateTrump’s 54% tariffs bring China close to ‘worst case’ scenario, PBOC easing soonChina's Commerce Ministry says will take countermeasures on Trump's tariffs
It's crazy to imagine how steep he actually did go with tariffs against China. That certainly wasn't really expected and you can see how risk trades have been shaken up by that. It's a major blow to global growth prospects.
Going back to the yuan, the comfort for China is that they have prepared for this somewhat since October last year. They allowed the yuan to weaken by over 4%, so they might not overreact for now. But in any case, this will surely mean more easing policy to be announced sooner rather than later.
This article was written by Justin Low at www.forexlive.com. Read More Details
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