Chinese yuan wilts again, cushioning the blow of Trump tariffs

SHANGHAI: China’s yuan continued its steady decline yesterday, defying US President Donald Trump’s warning over the dollar’s rise and providing Beijing with a buffer against punitive trade tariffs imposed by Washington.

The yuan weakened to 6.7763 per dollar in afternoon trading, according to Bloomberg data, and is at its lowest levels in a year following a weeks-long slide as the trade conflict has heated up.

The yuan’s fall provides “a significant offset to the loss in export competitiveness for Chinese exporters due to higher US tariffs”, Rajiv Biswas, chief Asia economist with IHS Markit, told AFP.

“The (yuan’s) slide against the US dollar will substantially cushion the impact on Chinese exporters from the planned next round of US tariffs.”

The world’s two largest economies face a potential fullblown trade war after the United States earlier this month imposed 25 per cent tariffs on approximately US$34 billion of Chinese mechanical and technological products, sparking a tit-for-tat response from Beijing.

Washington has since threatened tariffs on another US$200 billion in Chinese exports, prompting Beijing to vow further retaliation.

In excerpts of an interview with US television network CNBC aired Thursday, Trump said a strong dollar “puts us at a disadvantage”, adding that the Chinese yuan “has been dropping like a rock”.

Those and other Trump comments that criticised Federal Reserve interest rate hikes caused the dollar to fall back in the US on Thursday. — AFP