SHANGHAI: China’s yuan fell to a near three-month low against the dollar on Thursday, dragged lower by a much weakened official guidance and market worries about higher tariffs on Chinese goods following Donald Trump’s win in the US presidential election.
As part of his pitch to boost American manufacturing during the election campaign, Trump said he will impose tariffs of 60% or more on goods from China.
Trump’s proposed tariff and tax policies are seen as inflationary and therefore likely to keep US interest rates high and undermine currencies of trading partners.
During Trump’s first presidency, the yuan weakened about 5% against the dollar during the initial round of US tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.
“We don’t think China policymakers would react to generalized pre-election candidate talk about tariffs before they actually materialize,” Citi analysts said in a note.
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