Editorial | US and China should reach deal to arrest yuan slide
- As the currency hovers above its psychological and strategic level to the dollar, agreement between both sides is needed to avoid a worsening phase in trade war
Chinese currency traders call it po qi or “breach seven”. That is the exchange-rate level of the depreciating yuan to the US dollar, the breaking of which is likely to signify a new and worsening phase in the trade war between China and the United States.
It will not only have enormous impact domestically in China, but also for the world economy, which is already softening.
At the moment, the yuan hovers around 6.9 to the US dollar. Most experts do not expect it to break the psychological and strategic 7 yuan level, at least not until after the Group of 20 summit opens in Osaka, Japan, on Friday.
A meeting between President Xi Jinping and his US counterpart, Donald Trump, has finally been set, and it will probably be the last chance the two sides have to thrash out an agreement before Washington carries out a threat to extend the 25 per cent levy on Chinese imports to the US to virtually all goods
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As a message of good faith ahead of the summit, Beijing has announced the issuance by the People’s Bank of China of 20 billion yuan (HK$22.7 billion) of one-month bonds and 10 billion yuan of six-month bonds in Hong Kong.