Sihai network

Does Sino US trade affect foreign exchange? What is the impact of Sino US trade on foreign exchange

Cui Tiankai, Chinese ambassador to the United States, said in an interview with Fox TV on the 21st local time that China is still ready to engage in dialogue with the United States to reach an agreement. "Our door is still open. '

In the interview, Cui Tiankai said that US negotiators "often" withdraw from some trade agreements at the last minute. "We are still committed to what we promise to do, but the US side often changes its mind.". Cui Tiankai said, "if we look back at the trade negotiation process in the past year or so, it is obvious that the US side has changed its mind more than once overnight to break the preliminary agreement that has been reached. '

However, Cui Tiankai said that the "door" of Sino US dialogue is still open. Since the last round of negotiations ended on October 10, no further negotiation plan has been announced between senior trade negotiators of China and the United States.

So what is the impact of China's trade war on the foreign exchange market

RMB: at the time of escalating trade disputes between China and the United States, the RMB exchange rate has changed dramatically this week, depreciating for several consecutive days. This phenomenon deserves close attention, and the RMB exchange rate is likely to depreciate in a trend.

In other words, the trade conflict may further worsen the already weak economic situation. A trade war, coupled with the weakening of economic momentum and a neutral central bank, as long as the Sino US trade war continues to escalate, the trend of RMB exchange rate depreciation will continue. However, the Central Bank of China may use short-term tools to temporarily adjust liquidity to contain financial risks.

US dollar: the trade war will affect the normal trade relations between China and the United States, thus causing an impact on the economy, and the US dollar will also be affected by the economic impact. In the case of unstable trade environment, it is questionable whether the US Federal Reserve can raise interest rates at the normal pace, which will also become a factor of pressure on the US dollar.

In other words, the trade war may increase the volatility of the US dollar, but the impact is limited. The prospect of the US Federal Reserve raising interest rates and strong US economic growth will have more say in the future trend of the US dollar.

Other safe haven currencies: the yen and the Swiss Franc may benefit from us China trade. Due to the lower risk preference, investors have greater doubts about the stability of traditional hedging assets such as US dollars, so capital may flow to assets denominated in US dollars. But if the global trade war escalates, such as the intensification of conflicts between the United States and Japan or between the United States and Europe, that may change.