SHANGHAI – China’s yuan on Thursday fell to its lowest value against the US dollar since the global financial crisis, with the central bank cutting guidance for the sixth successive trading session against a backdrop of intensifying Sino-US trade tension.
The country has imposed steep tariffs on c imports in response to similar US action. Though US President Donald Trump said he would temporarily lower duties recently imposed on dozens of countries, he increased those on China goods.
“The US and China are currently in a powerplay game of brinkmanship,” said ING global head of markets Chris Turner.
“Until a deal is announced or a big, bilateral meeting confirmed, USD/CNY will now be the focal attention of the FX market.”
A weaker yuan would make Chinese exports cheaper and alleviate tariff impact on the economy. However a sharp decline could increase unwanted capital outflow pressure and risk financial stability, analysts and economists said.
The central bank will not allow sharp yuan declines and has instructed major state-owned lenders to reduce dollar purchases, people with knowledge of the matter told Reuters.
The onshore yuan slipped to 7.3518 a dollar in early trade, its weakest since December 26, 2007.
Prior to market open, the People’s Bank of China set the midpoint – around which it allows the yuan to trade in a 2 percent band – at 7.2092, the weakest since September 11, 2023. That compared with the 7.3484 Reuters estimate.
The central bank has been lowering the midpoint at a measured pace, with Thursday’s cut contributing to the day’s decline, traders said.
The PBOC loosened its grip on the yuan this week by allowing the currency to weaken past 7.2. Still, its guidance is stronger than market projections in what traders and analysts interpreted as an attempt to keep the yuan steady.
