The article argues that the common view that the renminbi is significantly undervalued, and that China should let it appreciate sharply to shrink its trade surplus, overlooks the cause of the currency's weakness. China's merchandise trade surplus widened to US$1.2 trillion in 2025, and the author ties both the weak currency and the larger surplus to a deep adjustment in the property sector that has weakened domestic investment demand. Rapid appreciation without fixing domestic demand would, the article says, hurt exports and slow China's recovery, while also raising global prices of Chinese manufactured goods that have helped restrain inflation in advanced economies. Bond markets could also face pressure from higher inflation expectations, given large fiscal deficits and rising global demand for savings.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on freemalaysiatoday.com ↗
Keywords
yuanChinaexchange ratestrade surplus
Open a keyword to see other news on the same topic.
Related tickers and likely impact
DXY
• NeutralRelevance: low
| Market | Currencies |
|---|---|
| Close on 10/22/2026 | 101.62 |
| Change that session | -0.07% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- China GDP beats forecasts as export boom offsets weak demand
China's third-quarter GDP grew 4.5 percent, beating the 4.4 percent forecast and rebounding from three-year lows, while the first nine months expanded 4.6 percent. Booming exports, which rose by more than a third, offset weak consumer spending and a prolonged property downturn, with retail sales up 1.1 percent in September and fixed-asset investment down 7.2 percent in January-September. Analysts expect China to meet its 2026 growth target of 4.5 to 5.0 percent without extra stimulus, and its trade surplus is on track to surpass last year's US$1.2 trillion. Economists warned that dependence on exports and weak domestic demand remain concerns, with Societe Generale's Michelle Lam saying a shift toward household incomes and consumption is needed. The yuan strengthened to its highest since July 2022 after the data.
- China GDP beats forecasts as export boom offsets weak demand
China's GDP grew 4.5% in the third quarter, beating economists' 4.4% forecast and rebounding from three-year lows, while growth for the first nine months reached 4.6%. Analysts expect China to meet its 4.5% to 5.0% 2026 target without additional stimulus. Exports rose by more than a third and the trade surplus is on track to surpass last year's US$1.2 trillion, but retail sales (up 1.1% in September) continue to lag industrial output and fixed-asset investment fell 7.2% over January–September. Economists warn that reliance on exports and weak domestic demand leave the recovery uneven, and the yuan strengthened to its highest level since July 2022.
- Global Market: China yuan hits four-year high on export strength, weak dollar
- Yuan at 4-year high still not expensive enough to curb China's export machine
The yuan has hit its strongest level against the USD in four years, yet China's trade surplus is on track to break the 2025 record of 1,200 billion USD. The article argues that the nominal gain has not erased the price advantage built up through domestic deflation, as the yuan's real effective exchange rate (REER) remains about 15% weaker than four years ago. The REER fell 19% from April 2022 to June 2025, and the IMF estimated the yuan was undervalued by 12-21% in 2025. Weak domestic demand, with fixed-asset investment down 7.2% in nine months, pushes goods abroad: exports rose 36.3% in September, the monthly surplus reached 133.5 billion USD, and the nine-month surplus totalled 938.1 billion USD. AI-related high-tech goods and autos are now driving growth and are less sensitive to exchange rates, while exports to the US rose 39.6% from a low base last year.
- MUFG says firmer China growth offers yuan support , but uneven demand limits the upside
- China has no need or intent to gain competitive advantages through currency devaluation : central bank governor
People's Bank of China Governor Pan Gongsheng said China has no need or intent to gain trade advantages through currency devaluation, rejecting foreign media reports that Beijing deliberately keeps the yuan weak. He said the yuan's sensitivity to exchange rate movements in trade has dropped significantly, and China has never engaged in competitive devaluation during the Asian financial crisis, the global financial crisis or recent trade wars. The PBC runs a managed floating system that references a basket of currencies, and in extreme circumstances may intervene directly in the FX market, in line with international rules. Pan also said yuan settlements accounted for 29.1% of China's cross-border goods trade receipts and payments in the first half of 2026, up 1 percentage point from a year earlier.
Related markets
Latest news
- Why Investing in S&P 500 Index Funds Is a Whole Lot Riskier These Days
The article argues that investing in S&P 500 index funds is riskier now, mainly because the index is heavily tilted toward tech. Nvidia, Apple, and Microsoft make up about 22% of the Vanguard S&P 500 ETF (VOO), rising to nearly 40% for its top 10 holdings, all of which have AI exposure. The author warns that an AI bubble may already have formed, and a prolonged downturn could take several years to recover from, a wait many investors may not be able to afford. As alternatives, the article suggests considering ETFs that track dividend stocks or defensive sectors, which may be less vulnerable to sharp declines.
- Move Over, Tesla: This Robotics Stock Is the Better Buy
The article argues that Rockwell Automation (ROK) is a better choice than Tesla (TSLA), as it benefits from factory automation and the reshoring of U.S. manufacturing. It notes the U.S. has nearly 300 robots per 10,000 manufacturing workers, while Tesla is building its first batch of Optimus robots at Fremont and won't begin deliveries until at least the end of 2027. In the third quarter (ended June 30), Rockwell reported sales of $2.3 billion, up 8% YoY, with adjusted EPS rising 22% to $3.49 and an operating margin of 22.3%. The company saw strong growth in e-commerce, warehouse automation, and data centers, particularly in North America.
- Microsoft offers buyouts to 60,000 workers as it looks to trim costs
Microsoft is offering buyouts to about 60,000 employees, roughly a quarter of its global workforce, as it looks to cut costs while investing heavily in artificial intelligence. It is the first time the company has introduced a voluntary retirement program, available to employees in certain teams in the U.S., U.K., Canada and India; the memo does not give the number eligible, but news outlets reported around 60,000 out of roughly 223,000 workers globally. In July, Microsoft laid off 4,800 employees, saying those roles were not being replaced by AI. Its fiscal fourth-quarter revenue reached $90 billion and net income was $35.8 billion, beating analyst expectations. Microsoft 365 Copilot has more than 30 million paid users, but adoption is much smaller than Google's Gemini or OpenAI's ChatGPT.
- BC-Gold-Silver
According to AP, the nearest gold futures contract on the NY Merc settled Monday at $4,022.30 per troy ounce, up 31.20. The Dec 26 contract settled at $4,038.40, up 30.50. Silver futures also rose during the session.
- Elon Musk Warns of “Death and Consolidation” Across the AI Cloud Industry. Is SpaceX Really Different?
Elon Musk says debt markets have almost entirely shut off access to money for companies without substantial revenue independent of AI data centers, and expects the 200+ neoclouds to face “guppy-level death and consolidation.” The article uses CoreWeave as an example, with unsecured bond yields jumping to 15% in recent weeks and credit default swap spreads above 1,100 basis points, implying more than a 50% chance of default within five years. Musk argues SpaceX's other revenue makes it a more attractive borrower, though the article notes Nebius just secured a $3.5 billion credit facility from Citi, suggesting lenders have not stopped financing the sector. The author says SpaceX faces less imminent risk than CoreWeave, but its AI bets remain unproven because the company is still spending far more cash than it brings in.
- Intuitive Machines Just Dropped 30% in a Month. Is It Time to Sell?
Intuitive Machines (LUNR) stock fell 30% over the past month to $10.67, while the Procure Space ETF (UFO) dropped only 6% and Rocket Lab (RKLB) fell 22%. The article says the key risk is revenue concentrated in a few large government contracts, and the quarterly report showed an operating cash outflow of $59.8 million, a GAAP loss of $0.29 per share and shareholders' equity of negative $290 million. Q2 revenue reached $206.2 million, more than four times the year-earlier figure, backlog rose to $1.76 billion, and national security's share of sales climbed from 3% to 30%, helped by an 18-spacecraft award for the Golden Dome missile defense constellation. The company has not yet guided on free cash flow, and Mission 3 is set to launch in the first quarter of 2027. The article says the 30% decline already reflects much of this concentration risk, but investors should weigh their exposure carefully when adjusting holdings.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.