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Chinese yuan hits 5M low amid US-Sino trade tensions

Chinese yuan hits 5M low amid US-Sino trade tensions

Mubasher: The offshore Chinese yuan (CNY) tanked to its weakest since November 2018 amid worries over the impact of an escalating trade tensions between the US and China on global growth, Reuters reported.

The Chinese yuan dropped as low as CNY 6.949 against the US dollar, recording weakest level since 30 November. At 1:41 pm GMT, the USD/CNY pair rose 0.43% to 6.913.

The world’s two biggest economies are embroiled in an increasingly trade conflict that has seen them raising tariffs on one another’s imports.

“Rhetoric from both sides is getting more heated, making a US-China deal seem a long way off,” a report by New York-based Brown Brothers Harriman global currency strategy head Win Thin was quoted by the news agency.

This means that high-level talks between Washington and Beijing will not take place anytime soon until a meeting between US President Donald Trump and his counterpart Xi Jinping at the G20 meeting next June.

Thus, “the next round of tariffs will likely come into play, signalling further escalation and making a deal that much harder,” Thin added.

China’s central bank will use foreign exchange intervention and monetary policy tools to prevent the yuan from hitting past the CNY 7 per dollar level in the immediate term, Reuters reported, citing three sources familiar with the matter.