PBOC Greenlights Yuan Weakness With Fixing Past 7.2 Per Dollar
PBOC Greenlights Yuan Weakness With Fixing Past 7.2 Per Dollar
China Lets Yuan Weaken Past Key Level in Potential Boost for Exports
China eased its tight grip on the yuan by weakening its daily reference rate past the keenly-watched 7.20 per dollar level amid the dramatically escalating trade war with the US.
The People’s Bank of China set the so-called fixing at 7.2038 per dollar on Tuesday, the weakest since September. It’s the first time since President Donald Trump’s November election that the fixing breached 7.20, a level seen by investors as a soft-red line for official intentions toward the managed currency.
Weakening its currency is seen an option for Beijing to raise the appeal of its exports, a key driver of growth now under greater pressure due to the trade tensions. But a decision to allow the yuan weaken sharply is a tough one as it may increase bearish bets on the economy, worsen capital outflows, antagonize the US and dim prospects of any trade negotiations.