The risk of an FX intervention by the United States is increasing

Warnings of potential market turmoil are emerging if the US intervenes against the Chinese yuan.

Against the backdrop of a trade conflict that we have been warning for some time that it could turn into a currency, the US already has the potential to weaken the US dollar against the Chinese currency.

The reasons are the growing US dollar, despite the Fed's interest rate cuts and the accusation that China is a currency manipulator. In addition, the USD / CNY and USD / CNH exchange rates are beginning to cross the psychological barrier of 7, and we have yet to figure out whether the status quo will change dramatically. Enough rumors are already floating around the space, and there is speculation that the Trump Administration will intervene to weaken the US dollar.

A senior official at a Chinese bank based in London has said that this intervention is about to happen. Intervention can occur in the offshore renminbi market, where the currency is traded the most (the exchange rate is freer than the mainland market). The consequences would be serious. If the United States challenges China on the currency front, it will be seen as a political move and would cause major market disruption. An unprecedented situation will occur.

The employee of the bank in question remained anonymous behind his statements.

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