Both CNY and CNH falls dramatically today, and the CNH hits a record low. In fact, since last week US President Trump announced that a 10% tariff would be imposed on the remaining US$300 billion in Chinese imports from September 1, the decline of the RMB against the US dollar has begun.
The renminbi becomes a trade war weapon
Unlike other emerging Asian countries, China’s currency is still strictly managed. The People’s Bank of China has a number of tools to deal with the renminbi short-selling, such as issuing high-yield offshore notes. This indicates that China may lower the impact on the economy through the depreciation of the renminbi.
Apart from the rising right-wing populist in US, the competition in high-tech industry between China and the United States escalates the trade war. However, the political situation is complicated, especially under globalization, and the interests of countries are not easily to be identified. How does the Sino-US war and the relationship end? It depends on the wisdom of the leaders from both sides.
Adding gold to portfolios
The price of safe-haven assets rose sharply, and the price broke out above the level of $1400/oz. Adding gold to portfolios can diversify risk. In the recent wave of stock sell-offs, gold outperformed stocks, other precious metals, oil, and also some traditional defensive assets, such as long-term bonds.