Chinese Yuan Weakens as Central Bank Responds to Trade Tariffs
The People's Bank of China allows the yuan to slide past 7.31 against the dollar amid escalating US-China trade tensions.
The Chinese yuan has depreciated against the US dollar, closing at 7.31 yuan per dollar on the Shanghai and Shenzhen stock exchanges, marking its lowest value since January.
This decline is attributed to the decision by the People's Bank of China (PBoC) to allow the currency's exchange rate to weaken.
A weaker yuan is seen as beneficial for Chinese exports, as it makes Chinese goods less expensive for dollar-paying customers.
In the past week, the yuan has decreased by 1.2% against the dollar.
Beijing has stated its determination to 'fight to the end' in response to escalating tensions with Washington, particularly following President Trump's threat to impose an additional 50% tariff on Chinese goods, which would raise the effective tariffs on these products to around 100%.
However, the PBoC must proceed with caution, as a sharp depreciation of the yuan could lead to capital outflows and threaten financial stability, complicating negotiations with the White House.
Becky Liu, head of Chinese macro strategy at Standard Chartered Bank, commented that China is allowing greater flexibility in its foreign exchange rate as one of the tools to alleviate growth pressures amid rising tariff rates.
This decline is attributed to the decision by the People's Bank of China (PBoC) to allow the currency's exchange rate to weaken.
A weaker yuan is seen as beneficial for Chinese exports, as it makes Chinese goods less expensive for dollar-paying customers.
In the past week, the yuan has decreased by 1.2% against the dollar.
Beijing has stated its determination to 'fight to the end' in response to escalating tensions with Washington, particularly following President Trump's threat to impose an additional 50% tariff on Chinese goods, which would raise the effective tariffs on these products to around 100%.
However, the PBoC must proceed with caution, as a sharp depreciation of the yuan could lead to capital outflows and threaten financial stability, complicating negotiations with the White House.
Becky Liu, head of Chinese macro strategy at Standard Chartered Bank, commented that China is allowing greater flexibility in its foreign exchange rate as one of the tools to alleviate growth pressures amid rising tariff rates.
Translation:
Translated by AI
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