LONDON : Morgan Stanley sees a tactical opportunity for investors to position for a stronger Chinese yuan in the next few weeks amid signs the United States could ease tariffs on Chinese goods.
Tariffs imposed by Washington and Beijing on billions of dollars worth of each other's goods put pressure on the yuan when Donald Trump was U.S. president. Joe Biden said in May he was considering cutting tariffs on Chinese goods.
"Should the current administration decide to reduce tariffs by $10 billion, it would push CNY 1.8 per cent stronger based on the $580 billion of China exports to the U.S. in 2021, all things equal," analysts at the U.S. bank wrote.
The U.S. imposed $70 billion tariffs on goods imported from China between 2018 and 2019, while total U.S. imports from China were about $500 billion. During that time, the yuan weakened by 15 per cent against the dollar, Morgan Stanley said.