CHINA's central bank set a stronger-than-expected fixing rate for the yuan against the US dollar, showing that they are not yet trying to offset the impact of the new Trump tariffs by weakening the currency, according to a commentary from China Economic Review.
Given the two per cent fluctuation limit per day on yuan value imposed by the Peoples Bank of China (PBOC), the rate plays a key role in determining the overall exchange rate, CER said.
'Keeping the rate relatively stable is another sign, along with the limited retaliatory tariffs imposed by China, that the country's leadership may be setting up for trade negotiations with the US, rather than resorting to an all-out trade war.
'Markets are still betting that the yuan is going to weaken in order to protect exports and to offset pressure from the economy being in bad shape, but when that choice will be made is as yet unclear.
'It does however feel like after months of limbo in terms of what will happen next, we are seeing the opening salvos of this economic game of chess between China and the US,' the commentary said.
SeaNews Turkey
Given the two per cent fluctuation limit per day on yuan value imposed by the Peoples Bank of China (PBOC), the rate plays a key role in determining the overall exchange rate, CER said.
'Keeping the rate relatively stable is another sign, along with the limited retaliatory tariffs imposed by China, that the country's leadership may be setting up for trade negotiations with the US, rather than resorting to an all-out trade war.
'Markets are still betting that the yuan is going to weaken in order to protect exports and to offset pressure from the economy being in bad shape, but when that choice will be made is as yet unclear.
'It does however feel like after months of limbo in terms of what will happen next, we are seeing the opening salvos of this economic game of chess between China and the US,' the commentary said.
SeaNews Turkey
