Japan's ‘Mistakes’ Could Give China Pause on an FX Pact With U.S.
- Deutsche Bank strategists draw parallels with prior disputes
- Chinese currency has already weakened amid tit-for-tat tariffs
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China may be reluctant to commit to a deal with the U.S. that limits its flexibility on foreign-exchange rates if officials in Beijing draw lessons from previous trade clashes between America and Japan.
That’s the view of Deutsche Bank AG strategists Oliver Harvey and Shreyas Gopal, who wrote that U.S. pressure on its biggest economic rival in the early 1990s appears to have at least indirectly contributed to an inadequate policy response from the Japanese authorities. That led to an unwanted appreciation of the yen and protracted deflation, they wrote in a note Monday.