Yuan eases as China-US trade talks in Washington end in deadlock
China’s yuan edged down on Thursday as the Comprehensive Economic Dialogue in Washington ended in deadlock, with the US and China failing to agree any major steps to reduce their trade deficit.
The annual economic dialogue session ended with cancelled news conferences, no joint statement and no new announcements on US market access to China, casting a shadow over their trade relations amid White House threats to impose steel and aluminium tariffs on Beijing.
“The changing China-US relationship could become a risk factor to the yuan outlook in the rest of this year,” Ken Cheung, an analyst at Mizuho, wrote in a note. “President Trump may employ a more hardline approach towards China as geopolitical tensions in North Korea cool, and given President Trump’s political setbacks in domestic policy.”
The yuan edged down 0.2 per cent to 6.7656 per dollar on Thursday, after the People’s Bank of China lowered the daily reference rate by 0.02 per cent to 6.7464 per dollar.
The changing China-US relationship could become a risk factor to the yuan outlook in the rest of this year
However, sentiment towards the currency appears to be relatively stable for now. Foreign exchange net settlement on behalf of clients in June dropped to minus 923 billion yuan, from minus 852 billion yuan (minus US$126 billion) in May. The data reflects increasing forex demand from companies and individuals for travel purposes ahead of the summer holidays, while the recent dollar weakness may further undermine foreign exchange demand, Cheung said.