U.S. President Donald Trump on Monday revealed he was rebuffed when he asked officials to adjust the exchange rate of the dollar to counteract what he described as repeated currency manipulation by China of its Yuan.
Investors erased US$ 393 billion from China’s benchmark stock index on Monday, sold the Yuan and dumped commodities as fears about the spreading coronavirus and its economic impact drove selling on the first day of trade in China since the Lunar New Year.
There are many factors that affect the value of currencies and influence the flow of foreign exchange, but few have a more significant impact than a trade war.
Asian shares steadied slightly on Wednesday as investors caught their breath from a searing week-long selloff, with steps taken by Chinese authorities to contain a sliding Yuan helping calm fears of a full-blown Sino-U.S. trade and currency war.
World stock markets plunged on Monday as Beijing parried US President Donald Trump's latest tariff announcements by moving to let China's Yuan currency devalue and halting purchases of US agricultural products.
Federal Reserve Chair Jerome Powell, who last week cut U.S. interest rates as an insurance policy against the effects of simmering trade tensions, may need to buy more coverage after the United States late on Monday designated China a currency manipulator.
Chinese President Xi Jinping vowed Friday (Apr 26) to abolish subsidies to firms that impede fair competition - addressing a major bone of contention in US trade talks. Xi repeated past promises to lower tariffs, increase imports and open up more sectors of China's economy to foreign businesses.
The Chinese Yuan weakened to a decade low on Tuesday on concerns over China's slowing economy and the US trade war, but Beijing was expected to prevent it breaking the psychologically important 7 Yuan per dollar barrier. The Yuan drifted past 6.96 to the dollar, hitting its weakest levels since May 2008.
United States has refrained from labeling China a currency manipulator in a move which may help defuse escalating tension over trade between the two countries. President Trump has previously accused China of keeping its currency weak to make its exports more competitive.
China is taking its first steps towards paying for imported crude oil in Yuan instead of the U.S. dollar, according to Reuters, a key development in Beijing's efforts to establish its currency internationally.