SHANGHAI/HONG KONG (Reuters) – China’s yuan skidded against the U.S. dollar on Monday, weakening beyond the key 7-per-dollar level for the first time in more than a decade, as pressure mounted on the world’s second-biggest economy from an escalating trade row.
U.S. President Donald Trump stunned financial markets on Thursday by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a ceasefire in the trade war since his meeting with Chinese President Xi Jinping at the G20 summit in June.
After opening the onshore session at 6.9999 per dollar, the yuan CNY=CFXS had weakened to 7.0240 per dollar by 0155 GMT, the first time it had breached the 7-per-dollar level since May 9, 2008.
The drop in the yuan came after the People’s Bank of China (PBOC) set the midpoint for the yuan’s daily trading band CNY=PBOC at 6.9225 per dollar, its lowest level since December 2018.
The offshore yuan CNH=D3 also slumped, hitting a record low against the dollar of 7.1094 before rebounding to 7.0655 around 0200 GMT.
The flare-up in trade tensions has renewed global financial market concerns over how much China will allow the yuan to weaken to offset heavier pressure on its exporters.
But Frances Cheung, head of macro strategy, Asia, at Westpac in Singapore, said that “some depreciation in the renminbi is not going to help counteract much of the tariff impact, given high tariff rates.”
“With additional tariffs on the way, the PBOC is likely to come up with more easing to support growth,” she added.
Analysts have previously said that authorities will keep depreciation in check due to concerns about potential capital outflows.
Shares also dropped, with a sharp decline in Hong Kong equities weighing on the overall market, Gerry Alfonso, director at Shenwan Hongyuan Securities Co, said in an emailed comment.
Hong Kong’s Hang Seng index .HSI was 1.6% lower as the city braced for major disruptions to business as a general strike threatens to paralyze parts of the Asian financial center.
“The news of the CNY reaching 7 is also putting some pressure on FX sensitive sectors such as airlines,” said Alfonso.
Reporting by Andrew Galbraith and Winni Zhou in SHANGHAI and Noah Sin in HONG KONG; Editing by Shri Navaratnam
Sources from: Reuters
SVE NEWS is the leader in world news liberal sharing.
(Comments on this news are welcome)
Tips: More wonderful contents, please pay attention to “Instagram: @cwmalls “. From now on, WWW.CWMALLS.COM officially provides Custom Made Leather Jackets Series, Made to Order Leather Shoes Series, ODM Leather Bags Series around the world; whether for men’s style or women’s style, Whether it is Haute Couture, or prop clothing, performing costumes, professional clothing, special clothing, advanced customization, we can meet all your requirements; please pay attention and experience! Meanwhile, CWMALLS® Patented Product Series is also provided with Custom Made, Personal Tailor services, and appreciated and interacted synchronously via Google, Bing, Facebook, Twitter, Instagram,YouTube, Pinterest , LinkedIn, VK and other sharing platforms; welcome worldwide web celebrities, fashion icons, opinion leaders, columnists and other friends, partners to comprehend and cooperate actively! Thank you! In 2019 CWMALLS people, CWMALLS team, CWMALLS complex will bring you more surprises and values!