The offshore yuan tumbled 1.1 per cent to 7.4290 per US dollar in New York trading late on Tuesday, Bloomberg reported – the weakest level on records dating back to 2010 – amid market turmoil after the United States announced that additional 50 per cent tariffs on imports from China would go into effect on Wednesday.
The Chinese currency was trading at 7.3965 offshore at 8am on Wednesday.
China’s central bank allowed the yuan to weaken against the US dollar on Tuesday, setting its daily fixing rate – also known as the midpoint rate – at 7.2038 per US dollar.
The move marked the first time the yuan had fallen below the psychologically significant 7.2 threshold since September 2023.
A Goldman Sachs report said on Tuesday that the People’s Bank of China might tolerate mild and orderly depreciation of the yuan in the face of the ever-escalating trade war with the US.
While fiscal policy easing remained the primary tool for dealing with the drag on economic growth from US tariffs, and foreign exchange depreciation was a costly and less effective stimulus tool, the central bank was expected to allow greater two-way flexibility in yuan fixing, the report said.
