The trade war between the U.S. and China is turning into a brewing currency war, say analysts. Bank of America Merrill Lynch Global Research predicts what might happen to the Chinese yuan in three scenarios.
The yuan depreciated past 7 per dollar last week for the first time since the global financial crisis of 2008, which prompted theIn a recent report, the Bank of America Merrill Lynch Global Research predicts what might happen to theChinese imports from the U.S. are only a third of American imports from China, the bank pointed out. This means that China cannot match the U.S. tariffs in terms of quantity.
This is because "any deal is likely to include stipulation that would limit the room for any future RMB depreciation," the bank explained. "If Beijing feels that the downside for the RMB is limited, it is likely to want to limit the upside for the RMB, especially if it thinks any RMB appreciation becomes difficult to reverse politically.
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