China’s currency hits its lowest level in 16 months on Trump’s tariff fears
China’s currency has fallen to a 16-month low as the possibility of sharp tariff hikes by the new Trump administration fuels concerns about the growth prospects of the world’s second-largest economy.
The onshore Renminbi The exchange rate fell 0.1 percent to 7.34 RMB against the dollar on Wednesday, the weakest since September 2023, although the People’s Bank of China maintained a stable fixing rate ahead of Donald Trump’s inauguration this month.
China’s currency is allowed to trade within 2 percent of the daily rate set by the central bank, and the exchange rate is nearing the lower limit of that trading range.
The selling pressure partly reflects fears that Trump’s proposed high tariffs on Chinese products would force the PBoC to weaken the renminbi to offset their impact on exports, which have helped the country boost economic growth amid weak domestic consumer demand to maintain.
“The market is impatient and wants the renminbi to rise,” said Wee Khoon Chong, a senior market strategist at BNY.
The PBoC announced a daily fix of Rmb7.1887 against the dollar on Wednesday, almost unchanged from Tuesday’s fix of Rmb7.1879. But pressure on the exchange rate increased after strong U.S. economic data pushed the dollar higher on Tuesday.
The selling pressure on the renminbi is “essentially a reflection of the Trump trade,” said Ju Wang, head of FX and rates strategy for Greater China at BNP Paribas. “The market has been doing this since the US election. . . We feel like a lot is priced in, but the market doesn’t want to give up.”
Wang said the PBoC appeared to be in “a wait-and-see mode.”
The central bank wants to maintain a stable exchange rate while waiting for more clarity on Trump’s trade policy, analysts said, adding that any slight easing of the fix could risk a wider sell-off in the Chinese currency.
Trump said he would do it They impose tariffs of up to 60 percent on China.
Chinese stocks also fell on Wednesday: the CSI 300 index in mainland China fell 0.3 percent and the Hang Seng benchmark in Hong Kong fell 1.1 percent.
