COMMENTS: For the second time in two weeks, the Yuan (China’s currency) has dropped. However, this time it seemed to be an intentional central bank policy – or so claimed by the West. The Yuan dropped 0.73% on Thursday (Jul 12, 2018).
If the tit-for-tat trade war between china and the US continues, we may see more turbulence in both their currencies.
NEGATIVE FOR: for the US balances of trade and payments. It weakens the impact of the tariffs it slapped on Chinese products. This could get much worse and eventually overflow to undermine other currencies.
POSITIVE FOR: China, which has to maintain its export production at all costs. Also, it cannot be seen as blinking against the US stare. China cannot afford to see its economic growth stalled, especially now as it addresses its internal banking debt issues.
IMPACT POTENTIAL: Medium to High
TIME SCOPE: Short to Medium Term