SHANGHAI: China’s yuan edged up on Friday against a soft dollar, on track for its first weekly gain in two months that partly reflects Beijing’s success in slowing the currency’s slide in the face of tariff threats from Donald Trump.
Nevertheless the yuan is headed for its biggest monthly loss in nearly 1-1/2 years, and analysts say volatility will likely remain high with a Sino-US trade war looming under Trump’s presidency.
Although the yuan has somewhat stabilised supported by the central bank’s guidance through its daily fixing, “traders remain worried about geopolitics, and uneasy especially toward Trump’s policies,” forex consultancy Pingpong Intelligence said in a note to clients.
China’s yuan gains as dollar extends weakness on trade war concerns
Trump, who takes office on Jan. 20, said on Monday he would impose a 10% tariff on Chinese goods. He had threatened tariffs in excess of 60% while on the campaign trail.
On Friday, the yuan was changing hands around 7.2333 at midday, 0.15% stronger than Thursday’s closing price, having rebounded 0.3% from a four-month low hit on Tuesday.
The dollar index fell 0.2% to a two-week low.
“We have been saying that the dollar would come off given its stretched conditions,” Maybank said in a note.
“December also tends to be a seasonally weaker month for the greenback.”
Also aiding the yuan, a Reuters poll showed on Friday that China’s home prices are expected to fall at a slower pace this year and next, and stabilise in 2026, potentially easing concerns over the health of the world’s second-largest economy.
Investors also expect fresh stimulus measures to be unveiled at the Central Economic Work Conference next month.
The yuan has slumped 1.6% so far in November, on track for its worst monthly performance since June 2023.
“A further slide in the yuan against the dollar by a big margin is not likely, unless China suffers from systemic risks,” Nanhua Futures said in a note to clients.
“But there’s still downward pressure in the short term,” given Trump’s unconventional approaches in policymaking.
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