David Shairp: Renminbi weakness turns short-term focus to stability

Resumed 2015 trend depreciation

During an investment meeting last week, a question was raised about the Chinese renminbi (RMB) and whether it was set to weaken significantly once more, writes David Shairp, head of investment research at Prudential Portfolio Management Group.

In trade-weighted terms, the currency has started to weaken again, as the RMB has depreciated along with the softer US dollar against other currencies. Indeed, the trade-weighted RMB has moved in line with the USD trade-weighted index, which strengthened from August to December 2016, before weakening again from the start of this year. In short, it looks as if the RMB has resumed the trend depreciation that started in late-2015. Our sense in recent months is that the focus of Chinese policy has shifted away from seeking to support the economy towards maintaining stability and trying...