What if the World Needs a Weaker CNH Right Now?
One of the more dominant themes in global macro, really since Covid, has a been a stronger Chinese RMB.
Over the years, a strong CNH has been associated with many positive global economic outcomes. A strong CNH has generally been correlated with robust levels of global trade higher levels of aggregate demand and better global NGDP outcomes. And the inverse has been also very true, where a weak Yuan generally led to more subpar global economic outcomes, which was very evident during the 2010s decade.
The question now, for 2022, is two fold:
Is CNH biased to weaken from its incredibly strong levels?
Does the global economy, which has traditionally needed/wanted a stronger CNH, actually need a weaker one right now?
