Yuan's Dive: Navigating Trade Tensions and Tariff Turmoil

China's yuan continues to fall against the U.S. dollar, reaching a 19-month low amid escalating Sino-U.S. trade tensions. The drop follows the implementation of U.S. tariffs on Chinese imports and China's central bank's looser currency controls. Meanwhile, measures are taken to stabilize the yuan's fall.

China's yuan has taken another hit, plunging to a new 19-month low against the U.S. dollar as trade tensions between the two economic superpowers reach new heights. Investors watched as the yuan sank to unprecedented lows in offshore markets, influenced by U.S. tariffs on Chinese imports.

Early Wednesday, the yuan was trading at 7.3505 per dollar, its weakest level since September 2023, before stabilizing somewhat in Asian markets. This decline comes amid the ongoing trade war and in the wake of China's central bank easing its grip on the currency to mitigate export pressures from tariffs.

The People's Bank of China set the midpoint rate at 7.2066 per dollar, showing reluctance to let the currency depreciate drastically. State-owned banks intervened by selling dollars in onshore markets to curb further yuan drops. While a weaker yuan may boost exports, a sharp decline could risk capital outflow and financial instability.

(With inputs from agencies.)