SHANGHAI: China’s yuan hovered near a three-week low against the dollar on Friday and looked set for a second weekly loss, as concerns over worsening trade relations between the world’s two largest economies continued to dampen sentiment.
Trade relations with the United States have been a primary focus for investors, as US President Donald Trump is set to impose new reciprocal tariffs on several trading partners starting April 2.
Meanwhile, prospects of a widening yield gap between the US and China also dragged the yuan lower after senior officials at the central bank repeatedly talked about further monetary stimulus.
Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), reiterated on Thursday that the central bank would cut the reserve requirement ratio and interest rates at an appropriate time.
Widening yield differentials have been a key factor weighing on the yuan over the past two years, as investors sought higher returns from dollar-denominated assets, putting pressure on the local currency.
As of 0322 GMT, the onshore yuan was 0.04% lower at 7.2650 per dollar, not far from a three-week trough of 7.2693 hit on Wednesday.
Its offshore counterpart traded at 7.2734 yuan per dollar.
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