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The fall of the currency in China is moving from a soft trend to a more deliberate move. Tensions between the US and China are to blame.
Since mid-April, the yuan has weakened 9% against the US dollar. This is the sharpest drop in the exchange rate in a quarter century. This week, Washington and President Donald Trump were personally interested in the state of affairs. According to some reports, the Trump administration intends to double the sanctions tariffs by another $ 200 billion, raising the rate from 10% to 25%. Experts note that the continuation of work in the chosen direction can be regarded as an embargo.
The weakened yuan is no longer able to withstand the US dollar. Earlier, the currency fell against other major players: the euro and the yen, but today the leaders of China have broken their promise to keep the country’s currency basket in a stable position. The People’s Bank (NBK) manages $ 3.1 trillion of foreign exchange reserves, but its representatives have not decided to use available resources to stabilize the yuan.
The tensions from China are explained by concerns of the business sector about the possibility of increasing US pressure on the export of goods. The early attempts of the Chinese authorities to stabilize the exchange rate did not lead to positive results, increasing unrest. The problem is that the US cannot reach a consensus with the Chinese authorities on their share of trade in the region..
Earlier we wrote that an economic alliance from three countries gathered against China..
text: Evgeniya Likhodey, photo: Kyodo News / Beijing Financial News