China’s Adjustment for the 10% Tariff May Have Taken Place, Says MUFG’s Tan

The transcript discusses the impact of US tariffs on Chinese exports and the resulting adjustments in the yuan's value. It explores the People's Bank of China's (PBOC) strategy in managing the currency, emphasizing a defensive rather than offensive approach. The potential for using currency as a trade weapon is considered, with a focus on the trade-weighted exchange rate. Market reactions to recent yuan adjustments are analyzed, and predictions for future movements are made. The discussion concludes with insights into the flexibility of China's exchange rate and its implications for interest rates.

What is the expected impact of tariffs on Chinese exports to the US?

• No impact on the yuan

• Strengthening of the US dollar

• Decrease in the yuan's value

• Increase in Chinese exports

How do Chinese authorities typically handle currency adjustments?

• Without any specific strategy

• Quickly and decisively

• Gradually over several months

• By consulting international markets

What is the PBoC's approach to managing the yuan's value?

• Aggressively devaluing the yuan

• Pegging it to the US dollar

• Allowing market forces to decide

• Preventing excessive weakness

What is the market's reaction to the yuan's fixed rate?

• It is seen as a sign of strength

• It leads to a stable market

• It causes significant volatility

• It is ignored by traders

How does a flexible exchange rate impact China's monetary policy?

• It has no impact on policy

• It allows for more policy options

• It restricts interest rate cuts

• It leads to higher inflation