China’s yuan sinks to lowest in 11 years amid trade tension

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SHANGHAI, Aug 26, 2019 (BSS/AFP) – China’s currency on Monday slid to its
lowest point in more than 11 years as concerns over the US trade war and the
potential for global recession weighed on markets.

The onshore yuan fell to 7.1487 to the US dollar, its weakest point since
early 2008, in Asian trading.

Global economic tensions have intensified in recent days with the US and
China raising tariffs on each other’s imports, and President Donald Trump
calling on US businesses to pull out of China.

The yuan is not freely convertible and the Chinese government limits its
movement against the dollar to a two percent range on either side of a figure
that the central bank sets each day to reflect market trends and control
volatility.

The People’s Bank of China has set that rate steadily weaker in recent
weeks and set it on Monday at 7.057 to the dollar.

Allowing the yuan to depreciate makes Chinese exports cheaper and offsets
some of the burden of punitive US tariffs.

The yuan breached the key 7.0 threshold against the dollar earlier in
August, days after the US announced plans to impose fresh tariffs on Chinese
imports from September 1.

The plunge past 7.0 prompted Washington to officially brand Beijing a
“currency manipulator”.

China’s central bank has “resolutely opposed” the label.

 

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