SHANGHAI- China’s yuan slipped to a new three-week low against the dollar on Wednesday, as investors cautiously awaited more developments in increasingly fraught global trade relations.
US President Donald Trump raised tariffs on steel and aluminum imports to 25 percent on Monday, and said he would announce reciprocal tariffs over the next two days.
Looming trade tariffs pushed the dollar higher and pressured other major currencies, including the yuan.
And many market participants worried that China would be exposed to further tariff hikes following a 10 percent duty charged on goods imported from China given its huge trade surplus with the United States.
Trade tension between the world’s two largest economies was one of the main drags on the yuan during Trump’s first term. The yuan fell more than 12 percent against the dollar between March 2018 and May 2020.
As of 0313 GMT, the onshore yuan was 0.03 percent lower at 7.3079 to the dollar after touching a trough of 7.3123, the weakest level since January 20.
The offshore yuan traded at 7.3115 yuan per dollar.
Prior to the market opening, the People’s Bank of China (PBOC) set the midpoint rate around which the yuan is allowed to trade in a 2 percent band, at 7.1710 per dollar, and 1,261 pips firmer than a Reuters’ estimate of 7.2971.
