Bloomberg: Trump's Policies Could Cause Some Currencies To Collapse

• 25.11.2024, 18:48

The Chinese yuan will take the brunt.

Bank of America experts believe that investors are underestimating the risks of a trade war under Donald Trump. They predict a 5% drop in emerging market currencies in the first half of 2025.

Bloomberg writes that the Chinese yuan will take the brunt. In the first half of next year, the Chinese currency will fall to 7.6 yuan per dollar if the Trump administration imposes a 40% tariff on Chinese goods. At the same time, a 60% tariff will lead to a decrease in the yuan to 8 per dollar from the current level of 7.24.

The MSCI index - a stock index reflecting the situation on the global stock market - for emerging market currencies has weakened by about 1% since Trump secured his return to the White House, amid fears of additional trade tariffs and an escalation of the war in Ukraine. The currencies of Eastern Europe have suffered the most.

Experts say it's better to buy the dollar than emerging market currencies at this point, especially the yuan and the South African rand. They also looked at local bonds in Brazil, Hungary, Poland and Turkey, but strategists advise waiting for the dollar's peak in early 2025.