Hang on, how come President Trump doesn’t make a big deal about the Japanese yen?
The White House has a double standard when it comes to handing out blame for currency manipulation
Geopolitical considerations can often allow double standards to emerge which end up being reflected in markets. In that vein, while US President Donald Trump talks the talk on China, the White House has little to say about Japan where the local monetary policy settings still lend themselves to a relatively weak yen.
Given that Trump last week characterised China as a rival of the US, there’s a big element of Sino/US geopolitics at play. Yet, from the narrow perspective of the currency market the US government has nothing to complain about when it comes to the way the yuan has performed since Trump won the White House in November 2016.
In January 2017, President-elect Trump may have complained that US dollar strength versus the yuan was “killing us”, but even if Trump might have had a point then, that argument doesn’t hold in February 2018.
“Since November 2016, the Chinese currency has appreciated 9.5 per cent against the US dollar,” wrote TS Lombard’s chief China economist Bo Zhuang on Friday.
In January 2018 alone, as Cliff Tan, the Hong Kong-based East Asian head of global market research at Japan’s MUFG Bank has noted “the yuan strengthened by a monthly record percentage versus the US dollar – exceeding even its gain after the July 2005 de-peg – as the USD/CNY fell 3.40 per cent from 6.5120 to 6.2920 in terms of London closes”.