Currency War & China’s change of heart towards Cryptos

Trade war worries, Libra launch & currency manipulation blame seem to be pushing PBoC towards creating a CBDC

The Trade war kicked into high gear as the U.S announced new tariffs on Chinese imports to take effect on September 1st. As is the case when risk-off sentiment takes hold in markets — Gold rose, Yen rallied, the global stock of negative-yielding bonds to a record $15 trillion & but more importantly Bitcoin jumped 17% in the two days that followed.

China retaliated by putting a halt on buying U.S agricultural products. Overnight the Chinese Yuan skyrocketed past the psychological level of 7.00 against USD, which it has not seen in a decade. The level has acted as an unofficial ceiling to the pair (USD/CNY — chart below). On the other hand, Americans saw this is a deliberate action from the Chinese Central bank (PBoC) to gain an unfair trade advantage.

The U.S has long accused China of manipulating its currency to make its exports cheaper — a claim that the latter has vehemently denied. Economists have predicted previously that China might play the currency card if it is pushed against the wall. Whether there is any truth to the currency manipulation or not, the latest exchange of unpleasantries between the two biggest…