Chinese Yuan Mixed As Investors Wait Out Trade Talks

The  Chinese yuan is mixed against several major currency rivals on  Tuesday as  investors hold steady and  wait out the  US-China trade talks. In  the  meantime, investors are looking at  a  myriad of  reports to  find a  short-term trading direction for  the  currency. How much longer can traders hold out hope for  a  conclusion to  the  trade spat between the  world’s two largest economies?

This week, an  American delegation is in  Beijing to  discuss a  trade agreement. Recently, it was reported that Washington and  Beijing would on  the  cusp of  a  new trade pact, adding that President Donald Trump and  President Xi Jinping would meet for  an  official signing ceremony in  late March. Since then, however, the  Trump administration has demanded that China “double or  triple” the  total amount it wants to  purchase, which could be difficult for  the  world’s second-largest economy amid the  slowdown. It remains unclear now as  to  the  state of  trade talks.
As  the  trade negotiations linger in  the  background, numerous other reports have come out in  recent days.
According to  Boao Forum for  Asia (BFA)’s new report, titled “Asian Competitiveness Annual Report 2019,” China was ranked at  the  ninth competitive economy in  Asia for  the  sixth straight year. China lost out to  South Korea, Taiwan, Singapore, Japan, and  Hong Kong.
On  the  data front, offshore borrowing costs surged to  a  four-month high, and  if there is a  jump in  overnight borrowing costs then it could signal liquidity tightness.
Although Beijing has been instituting across-the-board tax cuts, there has been talk of  the  federal government implementing a  property tax. Senior officials at  the  annual National People’s Congress revealed that there was a  draft of  this proposal “steadily advancing.”
But experts, as  well as  property developers, assert that the  economy is too soft to  endure such a  tax. Local governments have also been open about their opposition to  this type of  levy, especially since municipalities depend on  land sales for  a  significant portion of  their revenues. It has been reported that local officials would be in  charge of  the  property tax rate.
In  any event, this tax would impact not just the  real estate industry, but it would also affect property-related sectors, such as  cement and  steel.
The  USD/CNY currency pair rose 0.09% to  6.7157, from an  opening of  6.7094, at  20:19 GMT on  Tuesday. The  EUR/CNY tumbled 0.33% to  7.5649, from an  opening of  7.5900.

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