Too many crowded bets on “7” for yuan-dollar rate could be dangerous

The Chinese yuan has been under pressure in recent weeks due to the double dip in recent economic data and more importantly, the escalating trade war with the U.S. Since then, the yuan has shown weakness against the U.S. dollar, breaking 6.9 to the USD, but also against major global currencies. The looming prospect of the China-U.S. relationship, as well as a likely continued lax monetary policy in China, has all pointed to a weaker yuan, at least in the short term. At this juncture, there is now a heated debate as whether it will hit “7” or, to put it in another way, if “7” is an unbreakable magic number. So far, the market seems to believe that the […]

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