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China has stabilized the RMB exchange rate in the first official currency correction since US President Donald Trump attacked the country for tariffs.
Wednesday, the People’s Bank of China set a $ 1 -dollar fee per year before the New Year’s holiday for more than a week, but the Chinese stock market has slipped.
During the closing of the market, Trump announced 10 % of Chinese exports, and Beijing has retaliated with US energy exports and other products that will be enforced next week.
The Trump administration has long criticized China by keeping the currency weakly to increase export competitiveness. During the last trade war based on Trump’s first term, Beijing has permitted the RMB to depreciate the US tariff hitting against its export.
Global Bank expected that PBOC would weaken the RMB, depending on Trump’s tariffs and stronger dollars. The RMB is trading for $ 1 per dollar, close to the top of the 2 % band that the central bank has allowed currency to move. Almost 3 % has been reduced since the night before Trump’s election victory in November.
Wednesday corrections can be interpreted as a signal that China is ready to defend the dollar’s value, despite the latter thanks to other trading currency. Beijing is reflecting the economy and trying to navigate the next movement from the Trump administration.
“This is a signal for the market to hold the RMB at the moment,” said Ju Wang, who is in charge of BNP Pariva’s foreign exchange and Chinese fees.
Former US Finance officials and economist Brad Sessers wrote in X: “For now, China does not want a currency war.”
China is taking measures to protect the RMB from speculation in the pressure of strong dollars and tariffs. In January, we started selling offshore invoices in Hong Kong, wiping off the liquidity of offshore Uuan and narrowing down the short positions.
WANG added that Chinese AI companies Deepseek surprised Silicon Valley with the progress of large -scale language models, improving emotions on China’s assets.
“People will be a little more cautious about shortening the yuan. There was a change of fairness led by deep -sequ.”
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The market in the mainland of China was opened positively in the first transaction session, as the market turmoil was released by deep -safe, but quickly fell.
The CSI 300 index, a company registered in the mainland, closed 0.6 %, but Hangsen in Hong Kong has decreased by 1 %, led by Chinese companies listed on territory.
Goldman Sachs analysts will decrease the yuan to 7.50 to $ 7.50 if the US tariffs system increases by 20 %, but the stimulating response from the Chinese government will increase local shares. He said he was expecting.
The memo released on Tuesday predicts that the MSCI Chinese Index will increase 14 % in 2025.
“This is a highly volatile market. And this year is a labor -intensive job for currency traders,” he warned that the further threat of tariffs will continue to be “the weight of the currency and the stock market.”
