Beijing: China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade war with US President Donald Trump that has roiled financial markets worldwide.
Senior Chinese officials are studying a two-pronged analysis of the yuan that was prepared by the government, the people said. One part looks at the effect of using the currency as a tool in trade negotiations with the US, while a second part examines what would happen if China depreciates the yuan to offset the impact of any trade deal that curbs exports.
The analysis doesn’t mean officials will carry out a yuan devaluation, which would require approval from top leaders, the people said, asking not to be named as the information is private. The yuan weakened as much as 0.2% to 6.3186 a dollar in onshore trading on Monday.
China’s central bank didn’t immediately respond to a request for comment.
“It seems as if Beijing is showing the full extent of policies they could deploy in response to Trump’s protectionist rampage," said Viraj Patel, a strategist at ING Bank NV in London. Bloomberg