MARKET WATCH - Trump's Victory Could Create a Supportive Environment for a Weaker Yuan

Foreks - Lynn Song from ING stated that Trump's victory would create an environment for a weaker yuan. According to Song, this could be attributed to assessments that the Fed may be less dovish in 2025, which would restrict the narrowing of the U.S.-China spreads that serve as a catalyst for the yuan's appreciation.

ING noted that another trade war would also not benefit the CNY, but emphasized that there are significant differences this time, saying, "While the first trade war caught many off guard, the current threat has been accounted for for some time. 'Trade War 1.0' took place during a modest Fed tightening cycle, whereas the current conflict is likely to occur during a modest easing cycle."

ING also assessed that it is unlikely for Trump's tariffs on China to be implemented until the third quarter of 2025, stating, "Therefore, the impact on the CNY may be relatively limited until late 2025." ING expects the CNY to remain a low-volatility currency compared to its peers.