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China Considers Yuan Weakening to 7.50 in 2025 as Trump Tariffs Loom, PBOC Reports

Dec 11, 2024, 08:09 AM

Chinese policymakers are reportedly considering allowing the yuan (CNY) to weaken in 2025 in response to looming tariffs from a potential second Donald Trump presidency. This potential move comes amid growing economic concerns and is seen as a strategy to mitigate trade pressures. Reports indicate that the People's Bank of China (PBOC) may contemplate allowing the yuan to depreciate to levels around 7.50 against the US dollar. The offshore yuan has already seen significant fluctuations, recently falling nearly 300 pips to 7.2815 against the dollar. Analysts suggest that this shift in monetary policy reflects broader economic worries, although experts caution that a large-scale stimulus is unlikely. The discussions coincide with China's annual economic work meeting, where top leaders are expected to outline policies for the upcoming year, emphasizing the need for a stable economic environment amid increasing trade tensions.