Morgan Stanley sees stronger yuan on possible US tariff relief


LONDON: Morgan Stanley sees a tactical opportunity for investors to position themselves for a stronger Chinese yuan in the coming weeks as signs indicate the United States may ease tariffs on Chinese goods.

Tariffs imposed by Washington and Beijing on billions of dollars of reciprocal goods put pressure on the yuan when Donald Trump was president of the United States. Joe Biden said in May that he was considering reducing tariffs on Chinese goods.

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“If the current administration were to decide to cut tariffs by $10 billion, it would increase the CNY by 1.8% based on the $580 billion of Chinese exports to the United States in 2021, all things being equal by elsewhere,” wrote analysts at the U.S. bank.

The US imposed $70 billion in tariffs on goods imported from China between 2018 and 2019, while total US imports from China were around $500 billion. Meanwhile, the yuan weakened 15% against the dollar, Morgan Stanley said.

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