Shorting Yuan Probably a Good Trade in Medium Term: Pendal Group

The transcript discusses the People's Bank of China's (PBOC) strategies to defend the yuan, focusing on verbal interventions and psychological levels like 7.0. It explores market forces, speculation, and the potential for shorting the yuan as a trade strategy. The impact of US tariffs on the yuan's valuation and the Chinese economy is also analyzed, with predictions on fair value under different scenarios.

What is the primary strategy used by the PBOC to defend the yuan around the psychological level of 7?

• Verbal intervention and counter-cyclical factor

• Reducing foreign reserves

• Increasing interest rates

• Implementing capital controls

Why might shorting the yuan be considered a good trade in the medium term?

• Due to the PBOC's lack of reserves

• Because of the yuan's consistent appreciation

• Given the PBOC's strong reserves and credibility

• Due to the euro's strengthening

What factor might provide opportunities to short the yuan?

• Rise in global oil prices

• Increase in Chinese exports

• Weakness of the dollar

• Strengthening of the euro

What was the effect of the yuan's devaluation last year?

• It increased Chinese exports significantly

• It offset some of the pain from US tariffs

• It led to a rise in foreign investments

• It caused a decrease in Chinese GDP

In a worst-case scenario with all Chinese imports to the US tariffed at 25%, what could be the fair value of the yuan to the dollar?

• Around 6.5

• Around 7

• Between 7.5 and 8

• Above 9