It’s an ‘escalation’, a ‘weaponisation’, even a ‘Pandora’s Box of uncertainty’. You can choose from a range of conclusions on China allowing its currency to fall through 7.0, but you can’t escape the fact that everyone so far has been overwhelmingly pessimistic.
Predictably, EM currencies have fallen sharply, mirroring the reactions to earlier tariff hikes, and investors think there is a template here – a weaker RMB is an indication to sell everything. Here’s a controversial take, though: RMB devaluation is a reason to buy, not sell EM currencies…
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.