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Stubbornly strong dollar prompts talk of U.S. attack on China's currency
By Eva Szalay
Financial Times, London
Thursday, August 22, 2019
Top Chinese bankers in London are warning of the drama that would follow any U.S. attempt to weaken the dollar by intervening in renminbi markets -- a move that would be seen by Beijing as a "political act."
The risks of such action have heightened since June, said analysts, after U.S. President Donald Trump repeatedly took aim at China and Europe for "playing currency games" as trade wars threatened to spill over into foreign exchange markets.
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The U.S. Treasury officially branded China a currency manipulator this month after the Chinese central bank allowed the renminbi to fall below 7 to the dollar, a key threshold last breached in 2008, leading to escalation in trade tensions. Today the renminbi was trading at a fresh low of 7.0749.
But despite a lull in tit-for-tat tariffs and a delay to some additional levies on Chinese imports to the U.S., the warnings are the latest signal that markets are taking the currency threat seriously. One senior staffer at a London-based Chinese bank said the U.S. could conceivably intervene in the offshore renminbi market, where the currency is traded more freely than on the mainland. But the consequences could be serious. ...
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