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Claims that China is deliberately weakening the offshore yuan are misplaced, according to Mizuho Securities. In a research note said the yuan is neither undervalued nor being artificially cheapened, and that criticism of the currency as “controlled” ignores key evidence.Noted that the PBOC’s daily guidance has mostly leaned toward appreciation, not depreciation, and that the yuan has actually been stronger relative to Asian peers since the first round of U.S. tariffs in 2018. China’s large trade surplus, he argued, is not the result of a cheap currency, but has persisted despite a relatively firm yuan.The comments push back against renewed political accusations that China is using the exchange rate to gain unfair trade advantage. —We note the reference rate for CNY each day and have been tracking its persistent appreciation. I think this note is not really new newws.
This article was written by Eamonn Sheridan at investinglive.com.
đź’ˇ DMK Insight
China’s yuan isn’t being manipulated as some believe, and here’s why that matters: Mizuho Securities argues that the yuan’s current valuation reflects market realities rather than state intervention. This insight challenges the narrative that the People’s Bank of China (PBOC) is actively devaluing the currency. If traders buy into the idea that the yuan is undervalued, they might miss the broader implications of a stable or appreciating yuan, especially as the PBOC’s guidance has leaned towards strengthening. This could impact forex strategies, particularly for those trading USD/CNY pairs, as a stronger yuan could lead to a shift in sentiment and positioning. Moreover, if the yuan stabilizes or appreciates, it could ripple through other Asian currencies, affecting regional trade dynamics. Traders should keep an eye on key resistance levels in the USD/CNY pair, particularly if it approaches recent highs. Watch for any shifts in PBOC policy announcements or economic data releases that could signal a change in the yuan’s trajectory.
đź“® Takeaway
Monitor the USD/CNY pair closely; a stable yuan could shift market sentiment and impact regional currencies significantly.
