Goldman Sachs' co-head of EM and FX research, Kamakshya Trivedi, spoke to Bloomberg TV in an interview earlier
- There will probably be more weakness in the yuan over the next 3 to 6 months
- Then there will be more stability after that as China's growth is holding up "ok"
- Doesn't think China will use the yuan as a weapon
- But some weakness so far won't be unwelcome by Chinese policymakers
The headline comment seems to be a pretty obvious one for all to see. Markets are still awaiting on China's detailed response in retaliation to the new US tariffs seen earlier today. They've been awfully tight-lipped about it, which begs the question if they are to even announce it at all in the next few days.
I mean if you think about it, China's retaliatory measures have come only when the tariffs are officially implemented. The latest $200 bn worth of tariffs by the US still has to be commented on by the public before being put into effect in the next two months. That gives time for China to work out a game plan.
I'm starting to think that the the "quick to forget" mantra will start to kick in soon enough when the market realises that China is going to stay silent until it really matters and we'll start to see the same moves we have seen in trading the trade rhetoric, and that is to fade it.
