prc30 on Nostr: China Morning Missive Attention is now quickly shifting to the Chinese currency. Will ...
China Morning Missive
Attention is now quickly shifting to the Chinese currency. Will Beijing decide to allow the Renminbi to radically depreciate? The answer is an emphatic no.
I’ve seen this debate ever since the Asian Financial Crisis back in 1997. The approach has been to moderate currency moves. More central though is that a rapidly depreciating currency can quickly lead to inflation. The Chinese hate inflation. It’s been at the center of so many historic popular revolts.
It is also another reason why policy is hell bent on keeping fiscal stimulus at bay. Inflation was seen in other markets off aggressive stimulus. That won’t happen here.
Nevertheless, you can expect to see a flood of headlines centered on how China will react to a Trump 2.0 regime of tariffs. Virtually all of those headlines will be grossly wide of the market.
Attention is now quickly shifting to the Chinese currency. Will Beijing decide to allow the Renminbi to radically depreciate? The answer is an emphatic no.
I’ve seen this debate ever since the Asian Financial Crisis back in 1997. The approach has been to moderate currency moves. More central though is that a rapidly depreciating currency can quickly lead to inflation. The Chinese hate inflation. It’s been at the center of so many historic popular revolts.
It is also another reason why policy is hell bent on keeping fiscal stimulus at bay. Inflation was seen in other markets off aggressive stimulus. That won’t happen here.
Nevertheless, you can expect to see a flood of headlines centered on how China will react to a Trump 2.0 regime of tariffs. Virtually all of those headlines will be grossly wide of the market.