Goldman Says China Tariff Pain Will Be Eliminated by Yuan Slump
- Depreciation will boost China’s GDP by up to 50bps, bank says
- Bloomberg replica of CFETS RMB Index is down 5% from June peak
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The yuan’s recent tumble on a trade-weighted basis will offset the drag on Chinese growth from the first two rounds of U.S. tariffs, according to Goldman Sachs Group Inc.
A Bloomberg replica of the CFETS RMB Index, tracking the yuan against 24 currencies, has fallen more than 5 percent from this year’s peak in June. By helping China’s export competitiveness, the slump should boost the country’s gross domestic product by 40 to 50 basis points, which is enough to blunt the impact of U.S. levies on $250 billion of Chinese goods, Goldman economists led by MK Tang wrote in a note dated July 25.