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It’s been coming for a year and now it is here. This will not cheer global markets as it transpires. A falling CNY is a nightmare for EMs which are already under pressure from a rising DXY. Eventually, this combination will break commodity prices as well. Pantheon with more.
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We had warned of a turbulent Q2 for the renminbi, and the currency has duly delivered, depreciating 1.3% against the dollar since the start of April, the largest move since May. The headwinds for the currency have been building for some time, and we have discussed the threat from trade and capital flows repeatedly, most recently here.
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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