Weekly commentary on international finance and economics including global events and how world issues affect our domestic issues.
Where Will the CNY Go?
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In the ongoing trade war between the U.S. and China, that country's nightmare is to agree to a 'Plaza Accord'-like deal, similar to the one that Japan agreed to in 1985. The Japanese yen was revalued by 200 percent within two years of that agreement, ending with Japan in a boom-and-bust cycle that meant many lost decades.
China, in this situation, would prefer a weaker yuan (CNY), citing its slowing economy and huge debt pile.
Since the People's Bank of China has already led the CNY stronger this year, to avoid criticisms of currency manipulation during trade talks, there may even be a relief devaluation of the yuan after the talks conclude.
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