The renminbi is set to notch its best quarter since the global financial crisis, helped by a sell-off in the dollar and bets from traders that the worst of the tit-for-tat tariffs between Washington and Beijing have passed.
China’s onshore exchange rate has climbed about 3.7 per cent against the dollar in the past three months to Rmb6.81, putting it on track for the biggest quarterly rise since 2008. The gains also surpass those of early 2018, when the Trump administration began imposing tariffs on imports of Chinese goods.
Tensions between Washington and Beijing have deepened this year, with the White House putting pressure on Chinese companies operating in the US and raising the prospect of “decoupling” the US economy from China’s. But neither country has shown any sign of abandoning the “phase one” trade deal signed in January, which commits each side to hold off on imposing additional tariffs.
“The main impact on the renminbi has come from the broad-based tariff increases that we’ve had over the last couple of years,” said Mansoor Mohi-uddin, chief economist at Bank of Singapore. Currency markets were not pricing in any additional tariffs ahead of the US presidential election in November, he added.