CNY: A trade war weapon - Nomura
Analysts at Nomura suggest that as for trade war rhetoric, the main consequence appears to be CNY weakness, which could well be part of China’s response to threats from the US, or it could reflect lower Chinese interest rates, or both.
Key Quotes
“But assuming US rhetoric will translate directly to policy may be premature. One reason is that if other countries weaken their currencies against the US, then it could negate the impact of tariffs.”
“Also, commodity markets are responding to the prospect of tariffs, with some products such soybeans, which have been targeted by the Chinese, seeing their prices falling sharply. This in turn could moderate the approach of the US if domestic farmers start to complain about these price declines.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
