China’s Yuan closed at its worst level in more than 17 years on Wednesday, following a record-low decline in its foreign counterpart overnight, as the tensions of the rising trade war in the US China Currency Markets shook. The Yuan on the country ended domestic trading at 7.3498 per dollar – the lowest closure since December 2007. The currency slide coincides with the increasing trade tensions between the world’s two largest economies. US President Donald Trump’s “reciprocal” rates came into effect on Wednesday, including steep duties of 104% on Chinese imports. In response, the top officials of China are expected to invest Wednesday to devise measures aimed at strengthening the economy and calming capital markets, according to sources familiar with the situation. Despite the tariff -related pressure, China’s central bank is unlikely to allow a sharp depreciation of the yuan. According to sources, the major state -owned banks have instructed to scale back their purchases from US dollars. Why did China’s currency slip? “Unless they are rolled back, the latest US tariff increases mean that China’s shipping to the US is more than halving over the coming years, even if the Renminbi is accepted that the Renminbi will weaken to 8 to the dollar,” Reuters said. “This will reduce China’s GDP with somewhere between 1.0-1.5%, depending on the extent of the revival (exports by other countries). This is a bigger hit than we have accepted, but will probably receive a further expansion in fiscal support,” he added. The foreign Yuan cut its earlier losses and rose by about 0.7% to 7,3769 per dollar during Asian trade, and returned to a drop of more than 1% in the previous session when it touched a record layer of 7,4288 overnight. On Wednesday, the People’s Bank of China set the Yuan’s center rate-the point of reference for nodding within a 2% band at 7,2066 per US dollar, which marked the worst level since September 11, 2023. This right allows the yuan to be as low as 7,3507, just slightly above the 7,3510 low reached in September 2023. The Chinese state attack has actively sold bands. morning in an attempt to slow down the depreciation of the yuan, according to two sources familiar with the situation. Despite these efforts, both the country and foreign Yuan dropped by more than 1% this month, which made them weaker compared to the beginning of the year, largely due to concerns about the impact of rates. Former President Trump on Tuesday accused China of devaluing his currency to counteract the effects of rates. Economists have noted that although a weaker Yuan can help make Chinese export more competitive and facilitate some economic pressure, a sharp drop can cause capital outflow and pose the risks to financial stability. (With input of Reuters) Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or brokerage companies, not coin. We advise investors to check with certified experts before making investment decisions. First published: 10 Apr 2025, 09:07 AM IST
Yuan falls at the lowest level since 2007 amid the increasing trade war in the US China | Einsmark news
