CNH broke 6.71 Russia's biggest bank could be kicked out of SWIFT,The US launches a review of tariffs against China

   Since late April, the exchange rate of RMB against US dollar has continued to depreciate, and has been in a pattern of shock since May. On May 3, the two-way fluctuation of the offshore RMB against the US dollar was more obvious, and the lowest point fell to 6.6976 yuan, just one step away from the 6.7 mark.

On May 6, the central parity rate of the RMB against the US dollar fell by 660 basis points to 6.6332, the lowest since November 5, 2020. The onshore yuan fell more than 400 points to trade at 6.6650 against the DOLLAR in early trading and continued to weaken, breaking the 6.67 and 6.68 levels within five minutes. Meanwhile, the offshore yuan plummeted to below 6.71 against the dollar for the first time since November 2020.

Citi analysts believe that an important reason for the RMB exchange rate movement is the sharp rise in the DOLLAR index. Supported by the Fed's more aggressive tapering than other central banks and global risk aversion, the dollar is expected to remain strong in the near term, putting pressure on other currencies, including the yuan.

European Commission President Ursula von der Leyen said May 4 that Sberbank's disconnection from SWIFT, the international payments system, would be included in a sixth set of sanctions against Russia, along with the disconnection of two other major Russian banks from SWIFT. Eu officials are pushing for a decision on the sanctions this week. The sanctions will only come into force if all 27 EU member states agree.

The Office of the US Trade Representative (USTR) announced in a statement on May 3 that the two actions of imposing additional tariffs on Chinese imports to the US based on the results of the so-called section 301 Investigation in 2018 will end on July 6 and August 23, respectively. From now on, the US side will initiate a statutory review of the relevant actions. The OFFICE of the U.S. Trade Representative (USTR) said in a statement on the same day that it will inform U.S. industry representatives who have benefited from the tariffs on China that the tariffs may be lifted. Industry representatives have until July 5 and Aug. 22 to apply to the office to maintain the additional tariffs. The office will review the duties based on the application, and the duties will be maintained during the review.

At an event on May 2, U.S. Trade Representative said the administration would use all policy tools to contain surging prices, suggesting that cuts in tariffs on Chinese imports could be on the table. Us Treasury Secretary Janet Yellen also said recently that the US government is carefully studying its trade strategy with China and it is "worthy of consideration" to remove additional tariffs on Chinese imports to the US.

The so-called section 301 investigation is derived from section 301 of the US Trade Act of 1974, which authorizes the US Trade Representative to launch investigations into "unreasonable or unfair trade practices" of other countries and, after the investigation is concluded, to recommend unilateral sanctions to the US President. Under the so-called section 301 investigation, the US imposed additional tariffs of 25 percent on Chinese imports in two batches starting in July and August 2018.

Source: Focus horizon

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