Barclays says there is a fall ahead =for the yuan, that markets have not yet 'priced in' higher tariffs.
- see fundamental reasons for the yuan to fall
- says the yuan has resilience since the US election, but “Despite this, we expect continued pressure on China’s balance of payments dynamics owing to tariffs”
- scope for large-scale trade diversion is much more limited compared with Trump’s first term
- China is still facing deflation, weak domestic demand and a troubled real estate market
- “We think the PBOC will react to tariffs by depreciating the CNY given the lack of other options, but could wait for further clarity before acting”
