HONG KONG- China’s yuan steadied against the dollar on Wednesday after slipping to one-month lows in early trade, led by stimulus hopes while focus also shifted to tariff risks posed by a possible return of the Trump presidency at next month’s US elections.
China announced it will hold a press conference on Thursday to discuss promoting the “steady and healthy” development of the property sector, reigniting hopes of further policy easing to underpin a housing market recovery and broad economic revival.
By 03:51 GMT, the yuan was 0.08 percent higher at 7.1135, after weakening to a low of 7.1250 per dollar in morning deals, the softest level since Sept. 10.
The offshore yuan traded at 7.1235 yuan per dollar up about 0.19 percent in Asian trade.
Analysts expect the yuan to stick to tight ranges in the near term due to mounting external risks including slowing US rate cut expectations and the return of the “Trump Trade”.
“Chatters of ‘Trump trade’ gathered momentum as we inch closer to US elections. Polls still show that Harris and Trump are neck and neck,” Christopher Wong, an FX strategist at OCBC, said in a note.
Wong noted that Donald Trump had defended his proposed tariff plans on foreign goods in a recent interview. The former president has proposed tariffs of 60 percent or higher on all Chinese goods.
Prior to the market opening, the People’s Bank of China set the midpoint rate around which the yuan is allowed to trade in a 2 percent band, at 7.1191 per dollar, its weakest since Sept. 12 and 17 pips firmer than a Reuters’ estimate.
Both the greenback and US 10-year bond yield have climbed this month amid the increasing odds of a Trump victory in the US elections. As a result, despite the domestic policy pivot to stabilize the economy, the yuan weakened past the key 7.1 level, Minsheng Securities said in a note.
