In a previous article named, “FxWirePro: USD/CNY might push above 7 in H2”, available at http://www.econotimes.com/ we suggested that the second half could be rough for the Chinese yuan compared to the H1, which has been quite well. Yuan is up around 1.2 percent against the dollar. It has failed to reach our expected target of 6.75 per dollar and reversed course from 6.78 area. This is the third time this year that these levels around 6.75 were tested.
We expect this crucial support to hold in the first half of the year before the currency pushes for 7 per dollar. The United States under Donald Trump will be more vigilant in reducing the trade deficits just as he promised and that is something which is not going to bear well for the Chinese economy that enjoys hundreds of billions of dollars trade surplus with the USA.
The recent increase in the interest rates by the People’s Bank of China (PBoC) right after Fed hike is the likely indication that the downside pressure on the currency persists. The yuan is currently trading at 6.88 per dollar.
