Yuan Bounces Back after Trump Victory

Proposed tax reforms under the Republican administration should result in “massive repatriated offshore funds” which “would, at minimum, support the US dollar on the margin, but would more likely provide a significant US dollar boost in concert with supportive interest rate differential provided the Federal Reserve,” said Stephen Innes, senior trader at OANDA.

It is widely believed that the recent sharp depreciation of the yuan is attributable to the strengthening cycle of the US dollar, with a potential interest rate hike by the Federal Reserve expected next month.

“The move above 6.80 for the yuan was a reflection of the broader US dollar rally, but to a degree, factored a level of uncertainty over global trade,” said Innes.

Innes expects further weakness in the yuan and other regional currencies in the short term, especially tied closely to US trade, such as yuan, the South Korean won and the Taiwan dollar.

South China Morning Post

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

Latest posts by Stephen Innes (see all)