China currency: yuan traders grow anxious at prospect of Donald Trump return to White House
- Investors are preparing for a possible return to the days of the US-China trade war which steamrollered the yuan
- A gauge of the cost to hedge the currency which covers the November 5 vote has climbed to the highest since 2017 relative to comparable periods
During his term of office, Trump’s policies helped drive the yuan to what was its weakest in a decade in August 2019.
“Jitters about the renminbi in the coming months are partly related to the possibility of another Trump presidency, which would mean more political and trade tension with China,” said Chi Lo, senior investment strategist for Asia-Pacific at BNP Paribas Asset Management. “Trump’s recent talk about levying 60 per cent tariffs on Chinese imports underscores such worries.”
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US election concerns are compounded by those about China’s domestic problems and measures to address them, which are also adding to the premium to hedge the yuan, according to Lo. Barring any assertive policy moves, “as long as such scepticism exists, the yuan exchange rate will be volatile,” he said.
