China's yuan closed at its lowest in 17 years, reacting to Donald Trump's escalating trade war with the United States, Reuters reports.
► Subscribe to the telegram channel “Minfina”: the main financial news
Record fall
On the domestic market, the yuan finished at 7.3498 to the dollar, its worst since December 2007. The currency hit a record low of 7.4288 to the dollar on the offshore market overnight, driven by tariff escalation, including 104% U.S. tariffs on Chinese goods.
The authorities' reaction
Sources say Chinese leaders are urgently calling a meeting to come up with a plan to rescue the economy and stabilize markets. The People's Bank of China has already asked major state-owned banks to slow their dollar purchases to curb the yuan's slide. The official rate is set at $7.2066, limiting the fall to an authorized corridor.
Forecasts and risks
Capital Economics analysts warn that new tariffs could halve China’s exports to the US, even if the yuan weakens to $8. This could reduce GDP by 1-1.5% unless Beijing redirects flows to other markets. A weaker currency could support exporters, but it also risks triggering capital outflows and financial instability.
Trump's policies are pushing the yuan into the abyss, forcing China to find a balance between exports and stability.