A U.S.-China Currency War? What You Need To Know

Wall Street in New York City.- Selling on Wall Street accelerated early Monday as a steep drop in the Chinese yuan escalated the US-China trade war following President Trump's

"Short-term exchange rate does not have a lot to do with the fundamentals, it's much affected by the sentiment, it's very volatile, and not in a linear relationshiop", Guan Tao, a former director of the worldwide payments department at China's State Administration of Foreign Exchange, the currency regulator.

"Further weakness would send a signal that China wants to start a currency war, which we strongly believe is not the case because this would do little to benefit the Chinese economy as other Asian currencies would just weaken along with the yuan".

The decision is a step toward what could become an unusual kind of currency war, in which the USA would intervene to counteract the effects of China's weakened currency, or both countries even take steps to increase the value of the other's currency relative to their own. China's latest move came in retaliation to Trump's announcement that he would implement more taxes on Chinese imports to the US.

The yield gap between Chinese and US benchmark 10-year government bonds stood at 134 basis points on Friday afternoon, compared with a low of 28 basis points hit in November.

The following explains the working of China's currency regime.

"Clearly, they are manipulating their currency from a trade point of view", Navarro said Friday.

A U.S. Treasury official said Secretary Steven Mnuchin spoke with IMF Acting Managing Director David Lipton this week by telephone about currency consultations and also about the leadership succession.

Trump retweets post implying Bill Clinton behind Jeffrey Epstein’s death
The claims were progressing in the absence of Epstein being a source of information". Ghislaine Maxwell knows everything Epstein", actress Mia Farrow tweeted on Saturday.

"It's extremely hard to make an objective case that this is warranted", said Obstfeld, now an economics professor at the University of California-Berkeley. China retaliated by lowering the value of the yuan and suspended purchases of U.S. agricultural products.

The International Monetary Fund has been reluctant to comment on the USA move.

"China isn't required to resist market pressure for a weaker currency", Setser says. It's really going to impact consumers even more and it's certainly, with the Chinese announcement that they're going to stop buying USA agricultural goods, that's going to hurt our farmers.

"The real effective exchange rate is one benchmark, and on that measure the yuan looks fairly valued at the moment", said Julian Evans-Pritchard, senior China economist at Capital Economics in Singapore.

He said the Trump administration's actions call into question the legitimacy of the whole process for evaluating currency manipulations.

The trade war is weighing on the global economy.

The People's Bank of China on Thursday set the CNY reference rate above the 7-level for the first time since 2008, at 7.0039. It would also depreciate the value of Chinese yuan-held assets.

Related News:



Most liked

No Man's Sky's Sean Murray "Secretly Doing" New "Stuff"
KitGuru Says: No Man's Sky Beyond might convince me to jump back in, especially with VR support and multiplayer all working. No Man's Sky Beyond launches next week, the third "pillar" in Hello Games' huge space adventure.

Samsung Galaxy Note 10+ coming in Aura White, with 5G support
The new device is also said to feature Afib notifications, fall detection, and will also feature ECG in a later update. Unfortunately, there's not too much to say about the S Pen or the stylus of the smartphone due to lack of information.

Pep Guardiola On VAR After Man City's Big Win
Kevin De Bruyne teed Sterling for the second, who later lifted the ball over Lukasz Fabianski to put City three goals to the good. Gabriel Jesus gets the nod to lead City's forward line with Sergio Aguero , who hardly featured in pre-season, on the bench.

'Never going back lol': Gigi Hadid robbed while on holiday in Greece
According to a post on her Gisposable Instagram profile, the model became the victim of thieves during the family holiday. Gigi had not too long ago documented her sister's birthday celebration in late July with a collection of pictures.

Apple will now pay hackers up to $1 million for reporting vulnerabilities
In this program, Apple will be supplying special iPhones to security researchers to help them find security flaws in iOS. There's also a 50 percent bonus for hackers who can find weaknesses in software before it's released.

Amazon’s Alexa can now talk slower or faster
We're impressed at how easy it is to slow her down, so it'll be great not to have to ask her to repeat herself multiple times. Some say the "conversations" with Alexa feel more natural since she has the ability to speak faster than her normal rate.

Rugby Championship: Australia thrash All Blacks 47-26 in Perth
Hansen said: "I'm obviously disappointed". "And Australia wanted to play footy, they wanted to play fast". Because we know how good they are and that's a sucker-punch if you start thinking about that".

Southern Indian floods kill at least 100, displace hundreds of thousands
More than 600 relief camps in Karnataka are now filled with 161,000 people, a state Disaster Management Authority official said. Most rivers are in spate and Chief Minister B S Yediyurappa has termed the natural calamity the "biggest" in 45 years.

Megan Thee Stallion Transforms Into Todoroki Tina on Cover of 'Paper'
Earlier this week, Nicki revealed she "fell in love" with the track upon hearing it, and made a decision to write a verse despite the fact she was losing her voice at the time.

Two Dead in Houston Freeway Shooting
Witnesses provided CPR until police arrived but the unidentified occupants in the vehicle that was struck did not make it. He was last seen wearing a red shirt and took off in a newer model, dark-colored, four-door sedan.

Barcelona coach Valverde: Neymar? We'll see
I count on him as I have. " Neymar did not complete a full week of training with the squad, so he can not play against Nimes". Neymar , 27, is expected to leave PSG this close season, with a return to Barca and shock switch to Real Madrid mooted.

Orioles’ Chris Davis restrained from going after manager, taken out of game
Baltimore pitchers gave up five home runs in the finale and surrendered a total of 16 homers during the three-game series. As his struggles have continued, the left-handed swinger has been used more and more sparingly against southpaw starters.

Facebook wants to give you a dedicated news section
Facebook's CEO Mark Zuckerberg back in April revealed the idea of the social media giant looking to be relevant in news again. Following the WSJ report , Facebook confirmed to CNBCthat it was indeed launching a new, dedicated news tab this fall.

John Abraham’s Brewing Bromance with Akshay Kumar
Well, currently, a video is doing rounds on the social media where Sonakshi can be seen knowcking down Akshay Kuamr. Out of nowhere, Sonakshi chose to give Akshay a whack in his chest, making him topple off his chair.

Preview & Schedule: Nadal & Fognini Renew Their Rivalry In Montreal
Thiem will next face eight-seeded Daniil Medvedev of Russian Federation , who beat Cristian Garin of Chile 6-3, 6-3. Up next for Thiem will be Russian eighth seed Daniil Medvedev , a 6-3 6-3 victor over Chile's Cristian Garin.