Chinese yuan falls on U.S. tariff threat, Australian dollar sinks
Comment of the Day

May 01 2020

Commentary by Eoin Treacy

Chinese yuan falls on U.S. tariff threat, Australian dollar sinks

This article by Olga Cotaga for Reuters may be of interest to subscribers. Here is a section:

The Chinese yuan fell to a one-month low versus the dollar on Friday, a day after U.S President Donald Trump accused China mishandling the outbreak of the novel coronavirus and threatened new tariffs on Beijing.

Trump said on Thursday he believed the virus may have originated in a virology lab in Wuhan, the Chinese city where the outbreak began. The Chinese state-backed Wuhan Institute of Virology has dismissed the allegations, and other U.S. officials have downplayed their likelihood.

The Chinese yuan fell in the offshore market by 0.7% to 7.1350 versus the U.S. currency, its lowest since April 2 CNH=EBS. On Friday the yuan fell to its lowest since March 25.

"Given the scale of the COVID-19 impact there is certainly a high risk of geopolitical tensions escalating considerably as lockdowns reverse," said Derek Halpenny, head of research at MUFG.

"This would clearly be another hit to global trade that would add a layer of dollar support going forward," Halpenny said.

Eoin Treacy's view

There is no political downside during this election year of blaming China for just about anything. It’s an easy target because it is less than forthcoming about sharing information on everything from economic statistics to coronavirus infection figures. That ensures there are always going to be questions about its ulterior motives, like global domination. Meanwhile, any politician that attempts to claim the vendetta against China over reaches will be accused of being a traitor.

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