Yuan's Plunge: Trump Tariffs Shake Chinese Markets

The yuan fell to a seven-week low as U.S. President Trump announced harsh tariffs on China and its partners. The market reacted with a risk-off sentiment, affecting China’s economic plans. Mainland investors increased buying in Hong Kong, despite market volatility and efforts to stabilize the yuan.

In a significant market jolt, China's yuan plummeted to a seven-week low, and stock markets quaked following U.S. President Donald Trump's announcement of sweeping tariffs. The tariffs, heavier than anticipated, hit China and its major trading partners hard, triggering investor caution globally.

Tariffs on imports from China skyrocketed to 54% from the prior 20%, affecting countries like Vietnam and Thailand. The immediacy of these measures has led to a deepening of a risk-off sentiment in the market. Lynn Song, ING's Chief Economist for Greater China, emphasized the severity of this escalation.

Despite this turmoil, mainland investors utilized the Stock Connect scheme to invest billions in Hong Kong stocks, indicating a strategic move to capitalize on the region's value amidst scarce assets. Meanwhile, China is scrutinizing its yuan defense to limit market contagion while negotiating with the U.S.

(With inputs from agencies.)