Chinese Yuan Could Recover After the Signing of the Phase One Trade Deal, But.. - Forex News by FX Leaders
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Chinese Yuan Could Recover After the Signing of the Phase One Trade Deal, But..

Posted Wednesday, December 25, 2019 by
Arslan Butt • 1 min read

According to Guan Tao, a former official at China’s foreign exchange regulator SAFE, the Chinese yuan is set to strengthen once the US and China sign the phase one trade deal and trade tensions recede, but could experience volatility as a result of cross-border capital flows.

Guan made these remarks in a recent interview with China Business News, adding that the partial trade deal which is expected to be signed shortly could alleviate trade tensions and bolster the confidence in Chinese markets, propping up the yuan. However, in case the global economic slowdown continues, it could result in market fluctuations worldwide and drive volatility higher.

China is expected to leverage macroeconomic as well as structural monetary policy tools to prevent any possible slowdown in its economic growth in 2020. However, Guan cautioned against depending too much on stimulus measures, quoting the example of Japan, as it could cause asset price bubbles and cause economic growth to stagnate in the long term.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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