| > Firstly, China has devalued the yuan to offset the rising tariffs that the United States has been imposing. In fact, China has devalued the yuan significantly since the Trump administration first placed a 10% tariff on Chinese goods – effectively negating the tariffs. And with the new 10% tariffs that Trump has promised to imposed on a wider range of goods China has in response devalued their currency further. I keep seeing claims that China is devaluing without numbers or context. Here's a 10-year chart of the USD/CNY exchange rate: https://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y At the start of the current administration (Jan 2017), the rate stood at about 6.96. Today it stands at 7.04. In the two years after the 2016 election (April 2018), the yuan had strengthened to 6.28. According to this timeline, the first round of US tariffs hit on April 7, 2017. https://www.reuters.com/article/us-usa-trade-china-timeline/... From the announcement of the first round of tariffs, the yuan actually strengthened. It has only "weakened" in the last year, and then only back to a level that slightly exceeds that of Jan 2016. Yet to hear the president and others tell it, China is on a currency devaluation bender the likes of which the world has never seen. Well, I'm not seeing it at least. It seems that the 7.0 level was broadly seen as a line in the sand. But like all psychological levels, they rarely mean anything in the long term. The trend is clearly for more yuan weakness based on the chart alone. Perhaps we'll even see even massive devaluation. But so far that's just speculation. The chart tells a story of a massive bowl formation (strongest yuan point in Jan 2014) hinting at severe weakness ahead, but we're nowhere close to that at the moment. |