Return to: Investor | Country
Press release
05 Aug 2019

China weakens currency, adding more pressure on global trade

Nick Wall comments on the fall in the value of the renminbi against the US dollar.


The main driver of today’s selloff in risk assets is China’s decision to stop defending the renminbi against the US Dollar, with the currency falling below Rmb7 to the dollar for the first time since the global financial crisis. Holding this steady was seen as key if there was any chance of trade talks succeeding, but after President Trump decided to add tariffs to the remaining $300bn of imports, China has decided to let it go.

This has a lot of ramifications. Most obviously, it makes a trade deal unlikely any time soon, especially after it was reported that Chinese companies have been told to halt imports of US agricultural products. Secondly, it means more dollar strength hurting the rest of the world that has borrowed a lot in the reserve currency – the risks of a further dollar squeeze and more foreign exchange volatility are now quite high. Thirdly, it’s deflationary – China’s currency strength meant it was importing some of the rest of the world’s deflation. This puts even more onus on the US Federal Reserve (Fed) to ease policy to get the dollar down. The curve, trade and the dollar should be the key metrics the Fed looks at, not lagging domestic data. There are now 60 basis points of Fed rate cuts priced before year-end, I don’t think this will be enough.

Fixed income
16 Jul 2019 | By Delphine Arrighi
Why the emerging market debt rally has further to go

Widespread cuts in interest rates may be in prospect, and, despite the rally, selected credits may be still cheap.

Fixed income
08 Jul 2019 | By Nicholas Wall
Greece: Electorate takes a turn to the right

Nick Wall, co-manager of the Merian Strategic Absolute Return Bond Fund considers the economic implication of New Democracy’s win in the 2019 Gre...

Next press release:
Merian Chrysalis Targets Capital Raise

10 Sep 2019

10 September 2019: Merian Chrysalis Investment Company Limited (Merian Chrysalis), the investment company advised by Merian Global Investors (MGI) has today announced its intention to raise £100 mill...

Read More