News

The renminbi halts in its slide against the dollar

Chinese policy makers appear to have paused the renminbi's depreciation against the dollar, signalling they do not wish to aggravate trade tensions with the US. “The renminbi's descent really picked up speed in mid-June, which we believe was what Beijing wanted,” said Stefanie Holtze-Jen, chief currency strategist at DWS, the asset management unit of Deutsche Bank. “The weaker economic data were certainly a good reason for this. However, we do not consider it a coincidence that the stronger devaluation began at the very moment when the talks with Washington had collapsed and the punitive tariffs were implemented. “However, we also believe that Beijing has now given a clear signal that it is not interested in a further devaluation that Washington would see as an escalation of the trade conflict.” DWS produced data to suggest the Chinese currency had not fallen in value as far as some commentary on the subject might imply. Compared with the start of the year, the renminbi has depreciated by less than 2% relative to the euro, for instance. “Whether China deliberately weakens its currency remains a question of time perspective anyway,” said a statement from the firm. “While the renminbi has depreciated against the dollar since 2013, it had gained around 35% against the greenback in the ten years prior to that.” ©2018 funds global asia

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