BEIJING – The Chinese government further weakened the Yuan against the US dollar on Wednesday amid a deepening currency row between Beijing and Washington.
The People’s Bank of China on Wednesday fixed the yuan’s central parity rate at 6.9996 per US dollar. Weaker than the level set on Tuesday, when it hit an 11-year low.
Both the onshore and offshore yuan slid in late morning trading on Wednesday reaching 7.0454 and 7.0796, respectively.
The yuan breached the key 7.0 threshold against the dollar on Monday — days after the US announced plans to impose fresh tariffs on Chinese imports in September.
China’s Central Bank is “controlled” by the government which controls the currency, banking system and exchange rate.
China’s government said Tuesday it is “resolutely opposed” to being labelled a currency manipulator. The bank’s governor Yi Gang has long vowed it would not engage in a competitive devaluation.
Allowing the yuan to depreciate makes Chinese exports cheaper and offsets some of the burden of punitive US tariffs.
Which could soon see virtually all of the roughly $660 billion in goods traded subject to duties.
The Treasury Department said it would consult with the International Monetary Fund about China’s falling currency, but observers said they did not expect much practical effect.
White House economic adviser Larry Kudlow offered reassurance Tuesday, telling CNBC there’s still an opportunity for a negotiated resolution of the trade war.
“The reality is we would like to negotiate,” Kudlow said. “The president has said if you make a good deal, maybe he’ll be flexible on the tariffs.”
Source: NPR, Bloomberg