HONG KONG: China’s yuan slipped against the US dollar on Thursday as investors remain cautious amid uncertainty over US tariffs and broader economic policies under the Trump administration.
By 04:35 GMT, the yuan was 0.15% down at 7.2690 to the dollar after trading in a range of 7.2590 to 7.2699, having earlier hit lowest level in one week.
Its offshore counterpart traded at 7.2749, down about 0.11% in Asian trade.
Sentiment over the Chinese currency continues to be undermined by the uncertainty surrounding US President Donald Trump’s tariffs threats.
“The potential risk of the US imposing additional tariffs on China remains a major risk factor for the renminbi (yuan) exchange rate, it is possible the tariff risks will further intensify,” said Ming Ming, chief economist at CITIC Securities.
Yuan slips on renewed investor worries about Sino-US trade relations
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% band, at 7.1740 per dollar, its weakest since January 20 and 821 pips firmer than a Reuters’ estimate.
The spot yuan has lost over 2% to the dollar since Trump’s election win in November amid heightening Sino-US tensions.
In overnight trade, the dollar rose to move further from recent 11-week lows, as investors assessed the strength of the economy and tariffs prospects after the most recent comments from the Trump administration.
That volatility in dollar and the potential pause on US rate cuts added to trader’s worries over the yuan.
To curb any sizable capital outflow, Chinese authorities are rolling out fresh measures, including increased scrutiny of overseas investments, to support the local currency.
“Once the currency stabilizes at a weaker level, the PBOC could cut policy rates to ease policy and facilitate fiscal stimulus,” Hui Shan, chief China economist at Goldman Sachs, said in a note.
