Urgent Warning: China’s Yuan Faces Unprecedented Plummet Amid Escalating U.S. Tariff Threat, Experts Predict
A Chinese bank is grappling with a weakening yuan as experts predict the currency could hit historic lows, influenced by anticipated U.S. tariff policies under President-elect Donald Trump. Major investment banks, including UBS, Barclays, and Goldman Sachs, forecast the yuan to average 7.51 per dollar by 2025, marking a potential record low according to data since 2004. Trump has already announced a 10% tariff on all Chinese goods, with possible increases to 60%, sparking concerns about the power balance between the two nations.
This tariff escalation is expected to appreciate the U.S. dollar, putting additional pressure on the yuan. Economists predict the yuan might need to weaken to 8.42 per dollar to offset the full impact of the tariffs. Since the U.S. election, the yuan has already depreciated by over 2%, trading at 7.2514 recently. During Trump’s first term, U.S. tariffs contributed to a yuan depreciation of about 5% in 2018.
China faces the challenge of stabilizing its currency amid this tension to avoid capital outflows and financial instability. The People’s Bank of China (PBOC) has maintained a tight grip on the yuan’s value, keeping a daily reference rate, and avoiding interest rate hikes which could hamper economic recovery. Meanwhile, the U.S. dollar has retreated slightly after Trump’s nomination of Scott Bessent for Treasury Secretary, who advocates a gradual approach to tariffs. This could ease market tensions and provide room for negotiations, impacting the stability of the yuan against the dollar.
Original Story https://www.cnbc.com/2024/11/28/chinas-yuan-to-hit-record-lows-as-us-tariff-threat-mounts-investment-banks-forecast-.html
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