Chinese Renminbi stumbling in the wake of a trade war

As reported on The Sydney Morning Herald

21 May 2019 - The Chinese renminbi traded at Rmb6.917 to the US dollar on Friday, falling shy of the seven renminbi to the US dollar mark. The breach of the mark would likely evoke a hostile response from the Trump administration which has warned China not to use currency depreciation to offset the impact of its tariffs on China's exports to the US.

China's currency has fallen a little more than 3 per cent against the dollar in the last month. Further devaluation of the currency will attract accusations of currency manipulation from the White House, which will only add fuel to the ongoing trade feud. While there is still a chance of a mutual agreement between the countries, China will be wary of allowing any further devaluation.If the trade war escalates, the most practical option for China would be to allow the renminbi to find its natural level.

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