Until recently, the increase in China’s economic weighting manifested on the currency markets primarily through the impact the country’s economy had on commodity prices. The trend in the renminbi itself had relatively little impact on the other currencies because the renminbi was extremely stable and closely pegged to the dollar. That said, recent monetary reforms changed the game in a big way.
Bastien DRUT, Roberta FORTES
The RMB (onshore) has depreciated by 1.6% vs. USD ytd. (-5.8% since August 10th, the day before the announcement of the RMB devaluation). It is however interesting to note that while the trade-weighted USD has continued to appreciate since August 10th (+4%), the trade-weighted RMB has depreciated (-2%).
Strategy & Economic Research