02 September, 2019
As it was expected Beijing and Washington interchanged new import duties which were considered as the next phase of the trade conflict. US President Donald Trump has once again stated that US-based companies should look for alternatives to Chinese material.
The current situation contradicts with the affirmations of the officials that they managed to achieve some progress in talks.
For now, the markets see the trend of stronger US dollar and slacker yuan. For reference, this trend occurred last year once trade disputes started.
According to the market data, the offshore yuan changed hands near $1.1780, by about 15% down from the high of March 2018.
PBOC restrains decline of the official rate to prevent panics in the markets, though it makes not haste to fight with the market. Notably, this policy has been unofficially approved by the International Monetary Fund. Earlier, the IMF stated that it had seen no signs of the currency rate manipulation.
At the same time, the US dollar is gaining grounds. This situation can be explained by the fact that American investors return funds to the USA striving to stay afloat during high uncertainties.
The US Dollar index hit the peaks of May 2017. The euro-to-US dollar exchange rate overcame the psychological level of 1.10. However, low economic reports in the USA can hamper greenback’s strengthening as well as summon drop at the end of the month.
The market expert noted that the upward trend of the US dollar rate can gather pace following return of the players after the summer holiday period. Moreover, an extra driver can be tougher rhetoric and fears of global economic growth speed.