CNY: 12 month round trip completed - Westpac

The Chinese yuan is almost dead flat against the US dollar over the past 12 months, a slight outperformance among Asian currencies in that time but, while there is virtually no net change, there has been substantial movement, the yuan weakening into year-end but rallying back this year, explains Sean Callow, Research Analyst at Westpac.

Key Quotes

“The fading “Trump trade” has seen all but PHP and HKD among Asian currencies rise against the US dollar this year. In this context, the 4.7% rise in CNH and 4.3% CNY gain YTD are actually slightly weaker than the Asian FX average. This is not unusual at times of substantial USD decline.”

“Some of the Asian currency strength arguably comes from the lack of substantive policy steps on trade protection from the Trump administration. Most notably, within weeks of taking office, Trump accepted China president Xi’s view that China was not a currency manipulator.”

“However, relations have cooled more recently, with Trump angry at China for not taking stronger steps on North Korea and US commerce secretary Ross pledging action, especially on intellectual property rights.”