(8 April 2025 – China) The escalating trade war between the United States (US) and the world is raising speculation that China may aggressively devalue the Renminbi (RMB) against the US Dollar despite committing to currency stabilisation policy.
The People’s Bank of China (PBoC) weakened the RMB daily reference rate for a fifth straight session on Wednesday, but moderated the pace of its adjustment.
The move came after the offshore RMB slumped to the weakest level since the creation of the market in 2010, as President Donald Trump threatened to push ahead with a 145 percent tariff on many Chinese goods while rolling back import taxes on phones, chips and electronic goods.
“There’ll be a transition cost, and transition problems, but in the end it’s going to be a beautiful thing ” Trump commented as the has triggered a significant market reaction with the S&P 500 falling more than six percent.
“If you have a negative growth shock, you’d want to have somewhat weaker exchange rate. Then from China’s perspective, they have aspirations to build a reserve currency and financial abilities. They want to keep things relatively stable if they can” commented Exante Data Founder Jens Nordvig.