Yuan Dips to 17-Year Low Amid U.S.-China Trade Tensions

China's yuan hit its weakest point in over 17 years, influenced by an intensifying trade war with the U.S. President Trump's tariffs and China's currency measures highlight economic tensions. The central bank's efforts aim to prevent further yuan depreciation while state-owned banks manage U.S. dollar purchases.

The Chinese yuan has plunged to its lowest level in more than 17 years as tensions between China and the United States escalate over trade policies. This decline follows a similar trend in the offshore yuan, which reached a record low, sending ripples through global currency markets.

In response, China's central bank is taking steps to stabilize the yuan by setting a new midpoint rate. Simultaneously, state-owned banks have been instructed to reduce U.S. dollar purchases, aiming to curtail any rapid depreciation. Top Chinese leaders are expected to convene to discuss strategies for economic stabilization amid these challenges.

The ongoing trade war, exacerbated by President Trump's hefty tariffs, could potentially cut China's exports to the U.S. by half in the coming years. Economists warn that a steep yuan decline could prompt undesirable capital outflows, thereby threatening financial stability. Market observers note a temporary recovery in the yuan as concerted efforts are made to mitigate further losses.

(With inputs from agencies.)