Chinese yuan eases for sixth straight session, sliding 2 per cent in a week amid deepening US-China trade war

The Chinese yuan lost 2 per cent against the US dollar in the past week, falling for a sixth straight session on Thursday afternoon, as trade war concerns continued to weigh on sentiment, prompting rumours that the People’s Bank of China (PBOC) would take action to stabilise the currency.

The offshore yuan in Hong Kong eased to 6.5166 per US dollar in late afternoon trade, down 0.54 per cent from Wednesday’s close. The currency has dropped 1,290 basis points, or 2.02 per cent, from last Wednesday’s level of 6.3876 per dollar, wiping out almost all the gains this year.

“The worry of a trade war is to blame for the drop of the yuan. The US has threatened to impose tariffs on Chinese exports, which has led to worries about the outlook for the currency. This has led to selling pressure in the last week,” said Ben Kwong Man-bun, director of KGI Asia.

The yuan is currently down 4.3 per cent from this year’s high of 6.2352 per US dollar on March 27, and is threatening to breach the year’s lowest close of 6.5340 on January 9.

The fall of the offshore yuan came after the PBOC set the currency midpoint lower by 120 basis points at 6.4706 yuan per US dollar on Thursday, a fresh five-month low. The lower setting follows a 351 basis point downward adjustment in the midpoint on Wednesday from the fix the previous day.