WSJ – China Hitches Yuan to the Dollar, Buying Rare Calm

PCV notes that the closer the yuan tracks the dollar the less likely it is that President Trump will enact trade measures against China, a major talking point of his campaign.

May 25, 2017

‘China’s central bank is effectively anchoring the yuan to the dollar, a policy twist that has helped stabilize the currency in a year of political transition and market jitters about China’s economic management.

The yuan weakened more than 6% against the dollar in 2016; this year, it is up roughly 1%, and the expectation that the currency will fluctuate—a gauge known as implied volatility—is around its lowest in nearly two years.’

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