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China lets yuan fall below 7 per dollar as trade war escalates

Section: Daily Dispatches

By Tian Chen
Bloomberg News
Sunday, August 4, 2019

The yuan plunged beyond 7 per dollar for the first time since 2008 amid speculation Beijing was allowing currency depreciation to counter President Donald Trump's latest tariff threat.

The exchange rate tumbled 1.2% to 7.0256 a dollar at 10:19 a.m. after the People's Bank of China set its daily reference rate at a weaker level than 6.9 for the first time since December. The offshore yuan sank as much as 1.9% to a record low, while the Shanghai Composite Index slid 0.3%.

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The yuan declined 0.9% in mainland trading last week, its biggest loss since mid-May, after President Donald Trump abruptly escalated the trade war with new tariffs on Chinese goods. Beijing pledged to respond if the U.S. goes ahead with a plan to impose a 10% tariff on a further $300 billion in Chinese imports.

"It appears that the tariffs hike suggests the return of tit-for-tat moves and a suspension of trade talks, and the PBoC sees no need to keep the yuan stable in the near term," said Ken Cheung, a senior currency strategist at Mizuho Bank Ltd. ...

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