CNY Strength Weakens Undervaluation Claims, BNY Says

BNY's Geoff Yu argues that the current strength of the Chinese renminbi (CNY) has strategic value. The yuan's appreciation against the NA-3 currencies (Japanese yen, South Korean won, and Taiwanese dollar), as well as against the US dollar and euro, weakens any case the US or EU might make that the Chinese currency is undervalued.

Yu highlights that China is boosting imports of semiconductors from Japan, South Korea, and Taiwan, and the stronger CNY supports this strategy. By reducing the cost of imported components, the currency's strength aligns with China's industrial goals while simultaneously deflecting international criticism of its exchange rate policy.