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Is yuan depreciation against the dollar a problem?

There is much less to it than meets the eye

Mark Sobel
Published Tue, Sep 6, 2022 · 05:32 PM

THE yuan has been steadily falling against the US dollar. It is approaching 7 yuan to the dollar, a level that when breached in 2019 prompted President Donald Trump – wrongheadedly – to order the US Treasury to declare China a currency manipulator on the spot.

Is China misbehaving? Should President Joe Biden’s administration work itself into a lather? The answer is no. There is much less here than meets the eye. Indeed, far less attention is being paid so far to recent yuan depreciation than in past episodes of downward pressure.

This dollar story primarily reflects the Federal Reserve’s rapid shift towards monetary tightening. The story is also impacted by Chinese economic weakness. Whereas China was originally aiming at 5.5 per cent growth this year, most r…

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