With the smooth trade talks between Donald Trump and Xi Jinping, the Chinese Yuan strengthened. (Image via: CNBC.com)

Yuan Strengthens as Trade War Alleviates

Alfonsus Adi Putra
Market & Investment
Foreign Exchange & Interest Rate
Jul 01, 2019
2165
On the sidelines of the G20 Summit in Osaka, Japan, President of China, Xi Jinping, met with President of the United States, Donald Trump. The meeting was anticipated since the meeting of the two state leaders was expected to discuss the future of the raging trade war between the 2 countries.

Fortunately for the world, the meeting went quite well, and both state leaders exchange sound pleasantries during the meeting. From the meeting, one main point is highlighted: China-U.S. reconciliation for their bilateral ties. Trump stated that the U.S. would hold back from slapping tariffs on China and Xi stated that China would love to buy more farm products from the U.S.

More shockingly, Trump stated that the removal of Huawei from the U.S. entity list would be scrutinized by the U.S. Commerce Department. Should Huawei be removed from the list, it will be a green light for the Chinese tech giant to hold electronic components and technology trading with the U.S. once more.

The pleasant result from the meeting certainly affects the Chinese Yuan’s foreign exchange rate towards the U.S. Dollar (USD), in a good way. In the aftermath of the meeting, the Chinese Yuan (CNY) grew strong by Monday (1/7). It rose to 6.82 CNY per USD, increasing by 0.8%. CNY gained its highest level since Trump’s tariff statement. Meanwhile, strengthening was also shown by Turkish’ Lira (TRY) rising to 5.74 per USD, since Trump did not intend to impose sanction on Turkey due to Ankara purchasing Russian defense system.

Unfortunately, the same could not be said for the Japanese Yen (JPY). Instead of following CNY’s stead, JPY weakened in the presence of USD. JPY weakened to 108.190 per USD. Following JPY, Swiss’ Franc (CHF) also down to 0.98 per USD. USD also gained over UE Euro (EUR) and Australian Dollar (AUD), both declining 0.15% and 0.35% respectively.

Source: https://uk.reuters.com/article/us-global-forex/yen-falls-yuan-gains-as-u-s-china-trade-truce-lifts-risk-appetite-idUKKCN1TV10E

Market , Investment , FOREX , China , Yuan , U.S. , Dollar , Trade-Talk , G20