Deutsche Bank indicates that the yuan is still 15% weaker than the euro, exacerbating Europe's trade deficit.

Deutsche Bank points out that the yuan is still 15% weaker than the euro, exacerbating Europe's trade deficit with China, while Germany calls on both sides to open negotiations on exchange rates.

On July 14, 2569 at 10.10:XNUMX p.m., Bloomberg News reported that Deutsche Bank stated that although the Chinese yuan has strengthened against the euro recently, However, it remains about 15% below the optimal level, which is one factor contributing to the European Union's (EU) continued trade deficit with China.

Shreyas Gopal, strategist at Deutsche Bank. A report released on Monday (July 14) stated that, considering various indicators such as purchasing power parity (PPP) and the external account balance, the yuan is still about 15% undervalued against the euro, although this is an improvement from last year's depreciation of 20%.

Gopal stated that Europe's competitiveness compared to China is not solely due to exchange rates, and the appreciation of the yuan cannot solve all problems. However, further appreciation of the yuan could alleviate the issue to some extent.

This year, the yuan has appreciated by 6.2% against the euro and reached 7.7074 yuan per euro in June, its strongest level since March 2568. However, the yuan is still about 13% weaker than its 2565 high of 6.7260 yuan per euro.

The issue of the yuan is becoming a key point in relations between the European Union and China, as many European countries seek to reduce their trade deficits with China. German Chancellor Friedrich Merz stated on Monday that the yuan has been undervalued by 25% for years and called for serious discussions between China and Europe regarding exchange rates.

Deutsche Bank also stated that, when assessed in terms of the German Mark (Deutsche Mark), Germany's original currency before the euro was adopted, the yuan is more undervalued than it is compared to the euro. This reflects that Germany is facing more severe challenges in competing with China than other countries in the eurozone.

Meanwhile, the People's Bank of China (PBOC) has signaled its acceptance of a gradual appreciation of the yuan against the US dollar, recently setting the yuan's daily fixing at its strongest level since February 2566, reflecting a more open stance towards a recent strengthening of the Chinese currency.

refer : bloomberg.com

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