EUR/CNY: Why China’s Yuan Is Drawing Scrutiny in Europe, What It Means for Euro

Explainer Why the Value of China’s Yuan Is Drawing Scrutiny in Europe The value of the yuan has become a flashpoint in trade relations between China and the European Union. Many EU policymakers and economists believe the currency is undervalued and a key driver of the bloc’s deepening trade deficit with the East Asian nation. That imbalance averaged about $1.1 billion a day in June. The yuan has strengthened versus the euro over the past 12 months, rising by around 9% as of late July. But it remains some way off its 2015 peak. As European industries struggle to compete with an influx of cheaper Chinese goods, there are increasing calls emerging from Europe for China to allow its currency to appreciate by about 20% to 30% to level the playing field.