As of Tuesday, the Treasury Department of the United States has officially revoked its statement that branded China as a currency manipulator in August. Following the announcement, the Chinese Yuan was seen gaining traction and recorded a new high in the past 7 months.
The phase 1 trade deal between the United States and China is set to be signed on Wednesday. As per the sources, Chinese Vice Premier Liu He has already landed in Washington to officialize the deal with President Trump tomorrow. The U.S decision of lifting the currency manipulator label from China was publicized on the arrival of the Chinese representative.
MUFG Bank Expects An End To The Trade War
According to MUFG Bank’s chief currency strategist, Minori Uchida, the recent decision from the White House has further improved the optimism regarding an imminent end to the trade complications between the two largest economies of the world.
According to the experts, the U.S decision of freeing China from the currency manipulator label is a massive goodwill symbol for the Chinese representatives. The sources further informed that as part of the trade 1 deal, the Asian superpower has agreed to increase its purchase of American goods by a significant $80 billion in the upcoming two years.
On the onshore trading front, Chinese currency was seen trading as high as 6.8731 against the greenback that marked its highest level since July 2019. The central bank of China also announced the daily trading band’s midpoint for Yuan at 6.8954 against the U.S dollar. The band was reported as the highest since August 2019.
Offshore Yuan, on the other hand, hiked as high as 6.8662. The currency, however, eased off later in the day. As per the analysts, the optimism of the trade data announced on Tuesday also helped push the Chinese currency higher in the forex market.
China’s Trade Balance Adds To The Positive Economic Data On Tuesday
China’s trade balance was recorded at 329 billion on Tuesday against the analysts’ estimate of 315 billion that was anticipated after November’s figure of a much lower 274 billion. The People’s Bank of China is expected to announce insight into the new loan on Wednesday. Along with officializing the phase 1 trade deal with the United States of America, that marks a major market for tomorrow for the Chinese currency.
The next round of negotiations with China, as per President Trump, however, may be pushed back until the U.S presidential elections 2020; a statement that hasn’t been broadly appreciated by its Asian counterpart.