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Weaker renminbi to cushion downside for China equities

Margaret Yang
Margaret Yang8/20/2018 07:30 AM GMT+08  • 5 min read
Weaker renminbi to cushion downside for China equities
SINGAPORE (Aug 20): The offshore renminbi (CNH) has declined 10% against the US dollar over the last four months, marking the longest streak of weekly loses seen in decades (see Chart 1). The swift depreciation of the renminbi is part of the thematic play
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SINGAPORE (Aug 20): The offshore renminbi (CNH) has declined 10% against the US dollar over the last four months, marking the longest streak of weekly loses seen in decades (see Chart 1). The swift depreciation of the renminbi is part of the thematic play of emerging market outflow that started earlier this year when the US dollar strengthened on the back of an improved US economy and the steady pace of fed rate hikes.

The timing and the magnitude of the currency’s weakening, however, is probably more a reflection of the escalating US-Sino trade conflict, which kicked off in April this year when the US banned ZTE from importing critical parts from US companies, than the pace of the rate hikes.

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