Mohamed A. El-Erian , Columnist

China’s Currency Calm Won't Hold Off the Storm

Tensions have eased about the yuan weakening beyond 7 to the dollar, but don’t count on that lasting.

August 27, 2019 at 10:00 PM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

Market reaction on the yuan goes from wild to mild.
Photographer: STR/AFP/Getty Images

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It hasn’t been that long since the Chinese yuan breached the “psychological level” of 7 to the U.S. dollar, roiling the markets and fueling concerns about the onset of a global currency battle that would exacerbate the effects of a full-blown trade war. This week, the yuan has traded notably lower in both the onshore and offshore markets, yet most of the commentary has been about the Chinese central bank’s restrained and constructive behavior. So what exactly has changed, and how durable is this?

Let’s start with some facts.