SHANGHAI: China’s yuan slipped on Monday despite a broadly weaker dollar, dragged lower by worries over an escalating global trade war and fresh signs of economic wobbles.
Analysts say more proactive government policies would lend support to the yuan, noting that Beijing is not showing any unwillingness to use currency weakness as a way of countering the economic impact of higher US tariffs.
The onshore yuan was trading at roughly 7.25 per dollar around noon time, 0.2% weaker than the previous close.
The yuan’s weakness comes even as the dollar index slipped further following five straight sessions of declines amid growing worries that US President Donald Trump’s trade war could hit the US economy.
“We expect USD/CNY to stay largely range-bound over the next three months, with the key swing factor leaning towards the broad USD and fresh tariff news,” Goldman Sachs said in a report.
“The ongoing US trade probe, set to conclude by April 1, may trigger further tariff headlines, adding to FX uncertainty.”
In further signs of growing trade tensions, China on Saturday announced tariffs on over $2.6 billion worth of Canadian agricultural and food products, retaliating against levies Ottawa introduced in October.
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