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Chinese Yuan Touches 11-Year Low As Trade War Intensifies

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On Monday, China's yuan fell to an 11-year low against the US dollar as trade war escalated over the weekend, intensifying the negative outlook on global economy for investors. The trade war and the latest developments in the Hong Kong anti-government protests dragged Asian stocks lower.

Chinese Yuan Touches 11-Year Low As Trade War Intensifies
 

In China's onshore market, the yuan fell to 7.1500/dollar, its lowest since February 2008, while in the offshore market, the Chinese currency slipped to 7.1850, its weakest since it began trading internationally in 2010.

The Chinese regulatory authorities have allowed its tightly-managed currency to fall around 3.6 percent so far this month as tensions with its trade partner worsened, raising fears of a possible currency war.

On Friday, China unveiled retaliatory tariffs on American cars to which US President Donald Trump replied with an additional 5 percent duty on Chinese imports. The tit-for-tat moves by the two countries have diminished hope for a resolution on their trade dispute anytime soon.

In Hong Kong, China's economic asset, the region has been seeing rough clashes between the police and the demonstrators, as violence has been escalating since mid-June in the protests that was intially sparked by a now-suspended extradition bill that could have allowed residents to be sent to mainland China for trial.

It has now intensified as broader anti-government protests. Various reports suggest that violence seen on Sunday was serious. Police shot a fire warning and used water cannons for the first time, the Guardian reported.

The protests have disrupted operations of companies and public services.

American tariffs and the protests have raised concerns of slower economic growth in China even as the analysts assume more policy measures to be taken by the country's government.

On Monday, the Chinese central bank-People's Bank of China, injected 150 billion yuan into the financial system via its medium-term lending facility.

Read more about: yuan china
Story first published: Monday, August 26, 2019, 12:54 [IST]
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