USD, RMB, interest rates, economic stimulus and trade
The Fed is increasing interest rates which causes the USD to appreciate v other currencies.
China does not have a formal peg but is defending the value of the RMB visa vi the USD by selling USD and buying RMB.
At the same time China is also reducing interest and adding stimulus to both the economy and the stock market.
But, if the USD keeps appreciating, China will have a tough choice to face: defend the RMB, which will cause their exports to become more expensive for every other country in the world, or let it depreciate against the USD and face some spillover inflation coming in from imports.
What's going to give - China keeps defending the RMB and take a hit in exports, or let the RMB depreciate to keep the economy stimulated?![]()
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China does not have a formal peg but is defending the value of the RMB visa vi the USD by selling USD and buying RMB.
At the same time China is also reducing interest and adding stimulus to both the economy and the stock market.
But, if the USD keeps appreciating, China will have a tough choice to face: defend the RMB, which will cause their exports to become more expensive for every other country in the world, or let it depreciate against the USD and face some spillover inflation coming in from imports.
What's going to give - China keeps defending the RMB and take a hit in exports, or let the RMB depreciate to keep the economy stimulated?
$USD/HKD (USDHKD.FX)$ $USD/CNH (USDCNH.FX)$ $USD (USDindex.FX)$ $USD/CNY (USDCNY.FX)$ $CUS Futures(DEC4) (CUSmain.HK)$ $China Concept Stocks (LIST2517.US)$ $Hang Seng TECH Index (800700.HK)$ $Alibaba (BABA.US)$ $BABA-W (09988.HK)$ $JD.com (JD.US)$ $JD-SW (09618.HK)$ $Meituan ADR (MPNGY.US)$ $MEITUAN-W (03690.HK)$
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whqqq : If export demand is projected to decrease, I think depreciating RMB would be the move. Fed increasing interest rate and China fed decreasing interest rate makes sense.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")