Original title: Reuters: the US dollar is expected to rise to 7.3 against the RMB as the Sino US trade war heats up
The research department of DBS group estimates that if the United States raises the US $200 billion tariff on Chinese goods from 10% to 25%, the US dollar will rise to 7.3% against the RMB, Reuters reported today. Under the worst-case scenario of a comprehensive trade war, the United States imposes a 25% tariff on all Chinese goods, the US dollar may rise to nearly 8 against the RMB, and the depreciation of the RMB will also have a negative impact on emerging Asian currencies.
At present, DBS Group maintains the forecast that the USD / RMB will rise close to 7.0 this year.
The report points out that the Sino US trade war began to heat up in the second half of 2018, and the economic growth of the United States is more stable than that of China. The annual GDP growth rate of the United States in the first quarter has exceeded 3% for three consecutive quarters, and the Federal Reserve Board has suspended the interest rate increase measures, and its attitude has turned to dove. As for China's official loose monetary and fiscal policies to cope with supply side pressure, the annual GDP growth rate in the first quarter was maintained at 6.4%.
According to the report, after the one-time depreciation of the US dollar against the RMB in August 2015, the opening and closing of each year are between 6.5 and 7. In order to achieve a low but sustainable economic growth rate of 6% to 6.5% with the current account balance accounting for about 0% of GDP, and take measures to reduce leverage when the environment permits, Chinese officials should prefer to maintain the stability of RMB exchange rate.
On May 9, at a regular press conference held by the Ministry of Commerce, Gao Feng, spokesman of the Ministry of Commerce, responded to questions raised by reporters about Sino US trade frictions. He said that recently, some Chinese and foreign media friends told me that it is very hard to track Sino US economic and trade issues, because Sino US economic and trade negotiations are in full swing and the pace is getting faster and faster. Indeed, in the past period of time, Sino US economic and trade cooperation has been developing rapidly The trade team has maintained close contact and has held ten rounds of high-level consultations so far. The teams of both sides have carried out a lot of work and made great efforts to promote important progress in the consultations. China's position and attitude are consistent and clear. We oppose unilateral tariff increases and there is no winner in the trade war. This is not in China's interests, not in the interests of the United States and not in the interests of the whole country We hope that the United States and China will work together to solve problems through dialogue rather than unilateral measures, and reach a mutually beneficial and win-win agreement on the basis of mutual respect and equality. At the same time, China is fully prepared, determined and able to safeguard its legitimate rights and interests.
On the afternoon of May 7, a spokesman for China's Ministry of Commerce, at the invitation of U.S. trade representative lethizer and finance minister munuchin, said that Liu He, member of the Political Bureau of the CPC Central Committee, vice premier of the State Council and Chinese leader of the China US comprehensive economic dialogue, will visit the United States from May 9 to 10 to conduct the 11th round of consultations with the United States on economic and trade issues.
On the same day, foreign ministry spokesman Geng Shuang said at a regular press conference that China has always believed that mutual respect, equality and mutual benefit are the premise and basis for reaching an agreement, and that the imposition of tariffs will not solve any problems. The negotiation itself is a process of discussion. It is normal for both sides to have differences. China does not avoid contradictions and is sincere in continuing the negotiation.
China goes to the US for consultation this week
Robert Lighthizer, the US trade representative, confirmed that from 00:01 on Friday, a 10% tariff will be imposed on imports worth US $200 billion (about NT $6 trillion). At the same time, he and finance minister Steve mnuchin pointed out that the tariff increase of 25% is a response to Beijing's sudden reversal of its previous key commitments.
"In the past week or so, we have seen China reneging on its promise - I would say, withdrawing the specific commitments it has already made," lightheyzer said, which is "unacceptable.".
Despite this, Liu He, China's chief trade negotiator, will lead a delegation to Washington this week to attend the U.S. - China trade talks, according to business insider and CNBC news on the 6th.
After President trump threatened to raise taxes on imported goods, the parties are increasingly worried that the US China trade negotiations will derail. However, Liu He is expected to go to the United States for negotiations according to his scheduled itinerary, which may symbolize positive development. Although the U.S. side has decided to raise taxes on Friday, menuchin said that if the negotiations return to the right track, Washington will reconsider.
Market observers believe that Liu He will come forward, most likely because if he does not participate in the negotiations, the US tariff on imported goods will be increased from 10% to 25%.
On the 6th, lighthazer accused Beijing of violating the commitments made in the negotiations. However, he also said that the Chinese trade negotiation delegation will come to Washington for talks on Thursday and Friday. He also stressed that talks will continue and that the two sides will not suspend negotiations after trump threatened to impose tariffs on commodities.