Hermes’s Dall’Angelo Sees Low Probability of U.S. Interfering With Yuan

The video discusses the People's Bank of China's (PBOC) strategy in managing the yuan amid US-China trade tensions, highlighting the shift from a trade war to a currency war. It explores the potential for US intervention in the FX market, with varying probabilities suggested by financial institutions. The discussion also covers the implications of China selling its US Treasury holdings, weighing the economic consequences and strategic considerations.

What is the main reason behind the PBOC's cautious approach in the FX war?

• To avoid rapid economic changes

• To strengthen the US dollar

• To increase trade tensions

• To devalue the yuan significantly

According to JP Morgan, what is a potential action the US might take in response to the yuan's value?

• Increase tariffs on Chinese goods

• Intervene to strengthen the yuan

• Sell US Treasury bonds

• Reduce interest rates

What is the estimated probability of US intervention in the FX market according to Nomura?

• 25%

• 20%

• 10%

• 15%

What could be a consequence for China if it decides to sell its US Treasury holdings?

• Strengthening the US dollar

• Increasing its FX reserves

• Decreasing the value of Treasurys

• Weakening the yuan

Why is it risky for China to sell its US Treasury holdings?

• It would increase US interest rates

• It could deplete its FX reserves

• It might strengthen the yuan too much

• It could lead to a trade surplus