The simmering trade tensions between the United States and China have threatened to spark a full-blown currency war after Beijing allowed the yuan to drop below a level it had previously defended with sustained vigour.
China’s central bank allowed the yuan to sink below the sensitive seven-to-one dollar level for the first time since 2008 in what one expert called a “weaponisation” of the currency. In the wake of Monday’s news, Asian shares slumped to a six-month low.
Beijing has consistently advocated the need for a higher yuan despite accusations from Donald Trump that it was deliberately keeping its currency low in order to flood America with cheap products.
But Monday’s move suggests that Beijing does not see any prospect of reaching an agreement in its trade dispute with Washington in the light of the US president’s threat last week to impose more tariffs on Chinese goods. » | Martin Farrer | Monday, August 5, 2019
