Chinese Yuan Declines to Seven-Week Low Amid New U.S. Tariffs
The Chinese yuan has fallen to a seven-week low against the U.S. dollar as a result of President Trump’s new tariffs, which significantly target imports from China. The PBOC is actively managing the currency’s stability, while traders expect further depreciation pressure. China’s government has called for an end to these unilateral tariffs and seeks fair negotiations with the U.S.
The Chinese yuan has recently fallen to a seven-week low against the United States dollar. This decline has occurred following President Donald Trump’s announcement of substantial tariffs on imports, particularly targeting China and its trade partners. The tariffs include a 10% baseline on imports and a new 34% tax specifically on Chinese products, in addition to an existing 20% tariff.
As a consequence, the onshore yuan (USDCNY) decreased to 7.3060 per dollar, marking its lowest point since February 13. Meanwhile, the offshore yuan (USDCNH) fell to 7.3485 per dollar by the end of the New York trading session, also reaching a low since February 3. These movements put increasing depreciation pressure on the yuan as traders awaited China’s counteractions to the tariffs and measures for currency stabilization.
Anticipating further declines, the People’s Bank of China (PBOC) set the midpoint exchange rate at 7.1889 per dollar, which was stronger than market expectations. This indicates its determination to limit depreciation of the currency. Lynn Song, chief economist for Greater China at ING, noted, “The immediate response is likely to see further depreciation pressure, but we expect the PBOC to continue with its currency stability objective.”
Furthermore, President Trump signed an order to close a trade loophole enabling low-value packages from China to be shipped duty-free. This order will take effect on May 2 and impacts products from both China and Hong Kong. Ken Cheung, chief Asian FX strategist at Mizuho Bank, remarked, “The PBOC has maintained the stability of the midpoint fixing, which means it has not changed its firm stance on maintaining FX market stability.”
On Thursday, major state-owned banks in China were actively selling US dollars to purchase yuan, influencing both onshore and offshore markets. The spot yuan opened at 7.2994 per dollar and traded at 7.3033 later, illustrating a decrease of 1.59% compared to the midpoint. China’s commerce ministry has urged the United States to repeal unilateral tariffs and seek resolutions through fair negotiations with trading partners.
In summary, the Chinese yuan has declined to a seven-week low due to President Trump’s significant tariffs imposed on imports, particularly affecting China. The PBOC appears committed to maintaining currency stability despite depreciation pressures. Analysts predict continued market fluctuations as stakeholders await China’s strategic responses to the tariffs, and the recent governmental orders further demonstrate the ongoing complexities in U.S.-China trade relations.
Original Source: www.tradingview.com
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