Yuan exchange would receive little impact even if the US and China signed a deal discussed in the first phase of the trade talks, according to experts. The global head of flow foreign exchange at Nomura Stuart Oakley expected yuan to trade around 7/USD.
Oakley said that it required a serious discussion on the complete elimination of import tariffs for yuan to strengthen below 7/USD. Tariffs, however, remain valid as the first phase of the trade talks resulted in the postponement in tariffs hike. US officials said that tariffs would be hiked if the negotiations did not make significant progress by the next deadline on December 15.
Analysts believe that Beijing will let yuan weaken further if Washington imposed more tariffs on Chinese goods. Weak yuan makes China’s export goods cheaper on the overseas market, hence offsetting the import tariffs.
On Saturday, Chinese Vice Premier Liu He said that China and the US had made significant progress in paving the way through the signing of a phased agreement. The statement sent yuan to 7.06/USD from 7.11/USD as the market expected that the tensions between the world’s two largest economies could ease soon.
