SHANGHAI: China’s yuan slipped against the dollar on Friday and looked set for the seventh straight weekly drop, the longest such losing streak since 2021, reflecting market worries of fewer Federal Reserve rate cuts and more US tariffs on Chinese goods.
During Donald Trump’s first presidency, the yuan weakened about 5% against the dollar in the initial round of US tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.
As part of his pitch to boost American manufacturing during the recent election campaign, Trump said he will impose tariffs of 60% or more on goods from China. The proposed tariffs, as well as other policies such as tax cuts, are seen as inflationary and likely to keep US interest rates relatively high in a blow to currencies of trading partners.
But, losses in the yuan on Friday were limited as the central bank again set its daily yuan midpoint at levels much stronger than markets had projected, with traders and analysts interpreting it as a sign of official support to prevent the local currency from falling too fast.
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% band, at 7.1992 per dollar, 490 pips firmer than a Reuters’ estimate of 7.2482.
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