"China Will Not Use Exchange Rates as a Retaliation Card Against the US"

Goldman Sachs Weighs Yuan Appreciation... Forecasts 6.70 Yuan per Dollar

[Image source=Yonhap News]

[Asia Economy Reporter Park Sun-mi] Despite escalating tensions between the U.S. and China, it is unlikely that China will use the exchange rate as a retaliatory measure. There are even forecasts that the yuan's value will rise, with the exchange rate dropping to 6.70 yuan per dollar.

Morgan Stanley's Chief Economist Chetan Ahya said in an interview with CNBC on the 15th (local time) that China is unlikely to use the exchange rate as a retaliatory card against the U.S. He stated, "Even if tensions between the U.S. and China continue, China will not use the yuan as a weapon to attack the U.S. China does not want the image that the yuan is highly volatile or unstable as a currency for foreign exchange reserves."

He reminded that China has long been promoting the internationalization of the yuan, explaining, "China will rather focus on stabilizing the exchange rate to attract foreign capital inflows."

When the yuan depreciates, China's export competitiveness increases, leading U.S. President Donald Trump to claim that China deliberately tolerates a weak yuan to drive its economy. Due to this perspective, concerns have been raised that if tensions between the U.S. and China escalate, China might further weaken the yuan to provoke the U.S.

However, despite recent tensions between the two countries, the yuan's value has been on the rise, supporting the argument that China will not use the exchange rate as a retaliatory card against the U.S. On the morning of the same day, the yuan was trading at 6.9868 yuan per dollar in the Chinese foreign exchange market and recorded 6.9872 yuan in the offshore foreign exchange market. Compared to May, when the exchange rate was around 7.17 yuan per dollar, the yuan's value has significantly increased.

Another investment bank, Goldman Sachs, also forecasted that the yuan's value will rise, with the exchange rate dropping to 6.70 yuan per dollar within a year. Jack Pan, Goldman Sachs' foreign exchange executive, made this prediction while positively evaluating the recovery of the Chinese economy against the U.S. dollar.

This content was produced with the assistance of AI translation services.