In a strongly-worded editorial, the People’s Daily, China’s official newspaper, condemned that the US was “deliberately destroying international order”. The piece was published hours after US decision to designate China as currency manipulator, even though such issue was not mentioned. The editorial said the responsibility of big countries is to provide the world with stability and certainty. However, “some people in the United States do just the opposite”.
USD/CNH edged higher to 7.1399 earlier today but pulled back from there. It’s currently trading at 7.07, below yesterday’s close. There is sign that PBoC is looking at stem the free fall in Yuan. The general consensus remains that China wouldn’t want steep fall in Yuan exchange rate, which would trigger disastrous capital outflow and decline in asset prices. Instead, the Chinese government would likely prefer controlled depreciation.
PBoC: China has not and will not use exchange rate to deal with trade disputes
China’s PBoC said today that the country “has not used and will not use the exchange rate as a tool to deal with trade disputes”. And it “advised” the US to “rein in its horse before the precipice, and be aware of its errors, and turn back from the wrong path”.
Further, PBoC warned that US designation of China as currency manipulator would ratchet up currency tensions and “prevent a global economic and trade recovery.”