Excerpt from Barron’s quoting DataTrek’s Nick Colas:
But for investors, the closely-watched yuan/dollar rate suggests it isn’t enough to rattle the market—yet, at least. In a note to clients, DataTrek Research co-founder Nicholas Colas said he watches the offshore yuan/dollar rate carefully as a signal for the pace of China’s economic recovery, U.S.-China relations and the possibility of Chinese equities rallying further. Since last Wednesday, the currency has been holding steady at the psychologically-important 7 yuan to the dollar—the same level before trade tensions spiked last year…
…The strength in the yuan versus the dollar also is a positive for investors. If the yuan strengthens further, Colas says it would be an important signal that emerging market equities, with Chinese stocks making up 40% of the MSCI Emerging Markets index, could keep rising. So far, the iShares MSCI Emerging Markets ETF (EEM) is up 22% over the last three months”….
Read the full article here on Barron’s!