FX News: Trade War Escalates, Yuan Falls
FX News – The Chinese renminbi (also yuan) plummeted to 11-year lows against the buck on Monday as the trade war escalates.
Stocks similarly plummeted into the red, with risks and threats further stunting global growth. In Hong Kong, the weekend saw streets with violence as the anti-government protests raged on.
Against the dollar, the onshore yuan lost 0.6% in early trade to 7.15 per dollar. That was as weak as it had been in February 2008. It also marks its second one-day drop in a month.
The offshore yuan slipped to a record-low of 7.1850 before it bounced back to 7.1595.
Stocks have also suffered, with the Shanghai Composite losing as much as 1.3%. Hong Kong’s Hang Seng index also lost 3.2%. Japan’s Nikkei 225 slipped 2.3%.
The yuan has been on a downward slope since the US officially named China as a “currency manipulator” this month.
FX news: Trump Committed a “Strategic Mistake”
Last Friday, US President Donald Trump announced additional tariffs on $550 billion Chinese goods. This came after China unleased retaliatory tariffs on $75 billion worth of US products.
This triggered a further escalation in the US-China trade war.
Over in China, state media called Trump’s actions as a “strategic mistake.” It added that China would not buckle to the US’s “unreasonable demands.”
The Communist Party’s People’s Daily newspaper said that the most recent move made it “impossible” for Trump to win.
Under the latest threat from the US, the 25% tariff on $250 billion Chinese imports would go up to 30% starting October 1. The other 10% duty on $300 billion worth of goods would go up to 15% starting September 1.
Meanwhile, China’s move will slap duties on American imports such as soybeans, beef, pork, and crude oil. The retaliatory tariffs will take effect in two rounds, one from September 1 and another from December 15.
Despite China’s efforts, its economy, investment, job growth, and market future have been slowing down since the trade war started.
FX News: Rates to Go Zero, RBA says
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