SHANGHAI: China’s yuan fell to its weakest level since 2023 on Tuesday after the central bank slightly loosened its grip on the currency in what analysts said was an attempt to counteract the blow to exports from an intensifying global trade war.
The escalating tariff spat between the world’s two largest economies showed few signs of abating. US President Donald Trump threatened to increase duties further on China, following their tit-for-tat tariffs on each other’s goods last week.
A weaker yuan would make exports cheaper and alleviate some pressure on China’s trade and the broader economy, but a sharp decline could fuel unwanted capital outflow pressure and risk financial stability, some analysts and economists said.
Prior to market opening, the PBOC set the midpoint rate , around which the yuan is allowed to trade in a 2% band, at 7.2038 per dollar, the weakest level since September 11, 2023 but firmer than a Reuters’ estimate of 7.3321.