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China would devalue its currency - the yuan reached a month low


On Monday, the RMB exchange rate fell by 91 basis points to the level of 7.0397 yuan per US dollar, fixed the minimum mark in November. Note that this dynamic has been going on four trading days in a row, although earlier quotes showed growth against the backdrop of what many market participants expected that continuing trade talks between the sides have yielded results and the exchange rate stabilized.



The weakening of the yuan continued for a sufficiently long period. In 2016, the Chinese currency has decreased by 6.7%, reaching lows for more than eight years. Already there was an increase in the currency against the dollar by 6.2% next year. Whereas in 2018 against the background of a trade war between China and the weakening of the US amounted to 5.1%.

This year, the Chinese yuan continues to reduce the rate in August dropped to the level of 7 units per dollar, updating at least eleven years.

But now achieving trade agreement is unlikely, since already a long period, the parties are trying to reach a common denominator, but this did not happen. Trump wants China bore responsibility for all offenses over a long period of time, but the Chinese government is ready to make concessions, but not ready to admit himself guilty of all charges by the United States.

And although the first phase of the trade agreement, which relates to procurement of agricultural China, the US, is already close to a logical conclusion, but market participants is of little interest. Into account is the next stage - the second phase of the agreement - Trump's complaint that China is stealing US intellectual property, thus forcing US companies to transfer their technology to the Chinese side.

Here it is necessary to take into account the fact that the closer the presidential elections, and on the one hand Trump needed a victory in order to use this trump card in the election race. While on the other hand, China knows this and especially tightens trade talks, hoping for a change of presidents.


Analytics WELTRADE



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