The Chinese yuan (renminbi) has dropped to its lowest level in 16 months, driven by strong US economic indicators and concerns about hefty tariffs from the incoming Trump administration. The People’s Bank of China is trying to stabilize the currency, but the market is increasingly worried about the impact of potential trade wars.
China ’s currency has weakened to a 16-month low following strong US economic data overnight and as the potential for sharp tariff increases from the incoming Trump administration fuels concern over growth prospects for the world’s second-largest economy. The onshore renminbi fell 0.1 per cent to Rmb7.33 against the dollar on Wednesday, its weakest since September 2023, in spite of the People’s Bank of China ’s maintenance of a steady fixing rate ahead of Donald Trump’s inauguration this month.
China’s currency is allowed to trade within 2 per cent of the daily rate set by the central bank, and the exchange rate is nearing the lower limit of that trading band. The selling pressure partly reflects fears that the steep tariffs on Chinese products proposed by Trump would force the PBoC to weaken the renminbi to offset their impact on exports, which have helped the country maintain economic growth amid weak domestic consumer demand. Strong jobs and services data in the US on Tuesday also strengthened expectations the Federal Reserve would cut rates more slowly than previously expected, in contrast to China, which is easing monetary policy to battle deflationary pressures. “The market is impatient and wants a blow-up in the renminbi,” said Wee Khoon Chong, a senior markets strategist at BNY. The PBoC has declared its determination to maintain the “basic stability” of the renminbi and not allow “overshooting” of the exchange rate in markets. Beijing, which is grappling with deepening deflationary pressures in the economy stemming from low household and investor confidence, has gradually pivoted towards more stimulus measures to boost growth. On Wednesday, it expanded a programme to subsidise consumers who trade in old appliances such as air conditioners and washing machines. But many economists believe it is holding off on announcing more spending plans while it waits for Trump’s inauguration on January 20 to get more clarity on potential tariff
China Currency Renminbi US Economy Tariffs Trump Administration Trade War Exports Economic Growth
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
China retail sales growth weakens unexpectedly in NovemberConsumption rises a less than forecast 3%, highlighting why Beijing has made it the top economic concern
Read more »
US Dollar Loses Ground as Global Reserve CurrencyThe US dollar's dominance as the global reserve currency is waning as central banks diversify their holdings. While the dollar remains the leading reserve currency, its share has been steadily declining for years.
Read more »
Justin Trudeau’s exit sets glum tone for Canada’s currency in 2025Political instability and prospect of US tariffs threaten to keep loonie grounded
Read more »
Wall Street Predicts Dollar Strength Despite Trump's Weaker Currency DesireThe US dollar is predicted to strengthen further despite President-elect Donald Trump's call for a weaker currency. Financial institutions anticipate the dollar's continued rise in 2017, citing market expectations for Trump's trade policies and tax cuts. This contradicts Trump's view on the strong dollar's negative impact on the US economy.
Read more »
Brazil's Currency Crisis Deepens as Real Hits Record LowInvestors and analysts warn that Brazil's currency crisis will worsen unless the government implements fiscal reforms and the central bank takes stronger action.
Read more »
De La Rue sees earnings slip on currency business, but cheers new contract winsThe 211-year-old bank note printer reported a 7.6% drop in underlying earnings to £7.3 million for the six months to September 30.
Read more »