China’s currency, the yuan, is on a downward track, not because of government action, but is a market reaction on the US tariffs on Chinese goods, says investment guru Jim Rogers. Washington has to blame itself for the weakening yuan, he tells in the Stocknewsbrief.com.
“If you put billions of dollars (in Chinese goods) under tariffs, don’t you think it would affect the currency?” Rogers told RT. He added that while the People’s Bank of China actually can have a hand in changing the renminbi exchange rate, the recent course of events is explained by basic economic rules.
“Anybody who knows any basic economics knows that if you hit a huge economy with lots of tariffs it’s gonna have [an] effect on the currency… It’s the way the market works.”
The weaker yuan can actually help Beijing to offset the impact of Washington’s tariffs on China’s exports. As its national currency declines, Chinese goods become cheaper to sell abroad. So, the US fears that it would not be able to sell its own goods while there are plenty of cheaper Chinese products on the market thanks to a weaker yuan.
“It makes American goods more expensive and therefore more difficult for America to sell goods in the world market,” Rogers explained.
However, the falling yuan has a downside, according to Rogers, such as an increase in the cost of living and production as everything China imports becomes more expensive.
Are you looking for more experts on the ongoing trade war between China and the US? Do check out this list.