Drop in the yuan vs the dollar since April
beijing — China’s politically-sensitive yuan sank to a 22-month low against the dollar on Thursday after the US Treasury declined to label Beijing a currency manipulator amid a mounting tariff battle.
The closely watched yuan fell to 6.9411 per dollar at mid-morning, coming its closest to breaking the symbolically significant level of seven to the greenback since December 2016. It recovered slightly in the afternoon.
The yuan, also known as the renminbi, or “people’s money”, has declined by almost 10 per cent against the dollar since April as China’s economic growth cooled and US and Chinese interest rates went in opposite directions.
That helps Chinese exporters cope with tariffs of up to 25 per cent imposed by US President Donald Trump in a fight over Beijing’s technology policy. But it raises the risk of inflaming American complaints about Beijing’s trade tactics.
Chinese officials have promised to avoid “competitive devaluation” to boost exports. Central bank governor Yi Gang repeated that pledge last weekend at a finance conference in Indonesia. But they have not said how far the yuan might be allowed to fall in response to market
China’s yuan has fallen as the country’s economy cooled and US and Chinese interest rates went in opposite directions. —
forces. On Wednesday, the US Treasury’s bi-annual report on currency policy said China failed to meet criteria to be labelled a currency manipulator, a status that can trigger sanctions.
But it said Beijing was, along with Japan and Germany, on a list of governments whose currency polices would be closely monitored. China’s foreign ministry welcomed the report and said it reflected “common sense and the consensus of the international community”.
“We hope the United States will respect the law of the market and basic facts and refrain from politicizing the currency issue,” said a ministry spokesman, Lu Kang.
The yuan’s depreciation is “reasonable and explainable,” said Zuo Xiaolei, a former chief economist for Galaxy Securities in Beijing. Zuo noted some other developing country currencies have
declined by 20 per cent or more in the same time. “If the renminbi had appreciated instead of depreciating this year, then China certainly would be a currency manipulator,” Zuo said. —
10%