Among the 11 analysts polled by CNBC, the majority do not see the currency weakening significantly, but rather a gradual depreciation engineered by the PBoC.
China may not be be able to weaken the yuan substantially to offset the impact of higher U.S. tariffs, according to a majority of market watchers CNBC spoke to.
The move sparked speculation that Beijing would allow the currency to weaken further to cushion the impact of U.S. President Donald Trump's tariffs. However, analysts caution that a significant weakening of the yuan could have ripple effects, including triggering capital outflows, something policymakers are keen to avoid. Indeed, the yuan has since strengthened both onshore and offshore.
"In fact, rapid depreciation could weaken consumer confidence and risk capital flight," she told CNBC. While major currencies like the U.S. dollar and Japanese yen have a free-floating exchange rate, China tightly regulates the value of the yuan within its domestic market. Chinese policymakers' commitment to stability was underscored by a series of measures to prop up the yuan earlier this year when a sharp surge in the U.S. dollar sent other currencies tumbling around the world. That effort aimed to dissuade market participants from placing one-way bets on the yuan's slide.
Currency Markets Economic Events Forex Markets China United States Markets Donald Trump Business News
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
CNBC's The China Connection newsletter: No deal in sight to stop U.S.-China trade warAnalysts now talk not just of a war over trade, but one that could spread beyond technology to investment and other realms.
Read more »
CNBC Daily Open: Fears of a U.S. recession intensify among consumers and CFOsThe U.S. occupies such a central role in the global financial and economic system that if a recession were to happen, it would have widespread repercussions.
Read more »
Arthur Hayes Suggests Fed or China’s PBOC Will Spark Bitcoin BoomCrypto Blog
Read more »
S&P 500 closes higher on soft inflation report, Nasdaq jumps 1% as traders snap up tech sharesLisa covers markets and investing for CNBC.com and CNBC Pro.
Read more »
CNBC Daily Open: The humongous 104% tariff on China is live — even Musk seems perturbedDespite growing consternation and concern expressed by economists and CEOs, Trump administration officials have been stubborn in defending its trade policies.
Read more »
China is tackling weak consumption with child care subsidiesAmong the top five priorities China has laid out for boosting consumption is child care subsidies.
Read more »