China Economy: Yuan Under Pressure as US Presidential Election 2024 Looms
Yuan Hits 14-Month Low
The People's Bank of China (PBOC) has reduced the daily reference rate for the yuan to its lowest point in 14 months, now set at 7.1991 per US dollar. This adjustment comes amid fears regarding external pressures as Donald Trump gains momentum for a second term in the White House. The yuan has seen significant depreciation against the US dollar since Trump's re-election.
Central Bank Dilemmas
The ongoing rise of the US dollar index worries international investors, causing increased devaluation pressures on other currencies. The PBOC faces distinct challenges as Trump has threatened 60% tariffs on all Chinese imports. The implications of these tariffs could severely affect China's economic landscape and inflation rates.
- Ding Shuang of Standard Chartered notes the need for stronger domestic policies to stabilize China's economy without relying on currency devaluation.
- UBS Investment Bank's Wang Tao projects the yuan may weaken further against the US dollar, forecasting rates of 7.3 by the end of 2024 and 7.6 by the end of 2025.
As the US gears up for the presidential election, with key appointments signifying a tougher stance on China, the economic growth outlook for China remains uncertain.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.