China’s Yuan hits 17-year low as trade tensions with US escalate | World News

China’s yuan on Thursday fell to its lowest value against the US dollar since the global financial crisis, with the central bank cutting its daily reference rate for the sixth straight session. The move comes against the backdrop of intensifying Sino-US trade tensions.China has imposed steep tariffs on US imports in retaliation to similar US measures. While US President Donald Trump recently announced a temporary suspension of duties on dozens of countries, tariffs on Chinese goods were increased.
China vows retaliation
The sweeping tariffs—part of a broader package targeting 60 nations—officially came into effect just after midnight Wednesday US time and was paused later Trump, except for China. China has pledged “resolute and forceful” countermeasures.
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“China continues to take firm and resolute measures to safeguard our legitimate rights and interests,” Chinese Foreign Minry spokesperson Lin Jian said. “We will not tolerate any attempt to harm China’s sovereignty, security and development interests.”
Lin accused Washington of weaponising tariffs as a form of coercion, calling them “bullying and hegemonic acts.”
ING global head of markets Chris Turner described the situation as a “powerplay game of brinkmanship,” noting: “Until a deal is announced or a big, bilateral meeting confirmed, USD/CNY will now be the focal attention of the FX market.”
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A weaker yuan may help offset the economic impact of US tariffs making Chinese exports cheaper. But economs warned that steep declines could spark capital outflows and risk financial stability.
To prevent excessive depreciation, China’s central bank has reportedly instructed major state-owned lenders to limit dollar buying, according to Reuters sources.
Yuan hits 17-year low
The onshore yuan slipped to 7.3518 per dollar in early trade—its lowest since 26 December 2007. It has lost about 1.2% so far this month and was last at 7.3464 as of 03:13 GMT. Offshore, the yuan fell to 7.3592 at the same time, down 0.17%, after hitting a record low of 7.4288 on Tuesday.
The People’s Bank of China set Thursday’s midpoint at 7.2092—its weakest since 11 September 2023—versus a Reuters estimate of 7.3484. The PBOC has been guiding the currency lower in gradual steps, a move traders say contributed to the day’s slide.Story continues below this ad

While the bank allowed the yuan to breach the 7.2 mark this week, its reference rates remain stronger than market projections—signalling efforts to maintain stability.
“A modest, gradual depreciation of the yuan is still the preference,” said economs at Societe Generale. They added that the tariffs are “just too big to be offset FX depreciation” and that Beijing values currency stability to preserve investor confidence.
Trade war
The deepening rift between the world’s two largest economies is rattling global markets. On Tuesday, Trump escalated the standoff announcing a 104% tariff on all Chinese imports. Initially, Trump had imposed a 34% tariff, which Beijing swiftly matched. In response, the US raised duties another 50%.Story continues below this ad
Combined with earlier levies from February and March, the total US tariff burden on Chinese goods under Trump’s second term now stands at 125%. Beijing has vowed to res “to the end,” signalling no immediate de-escalation.
(With inputs from Reuters)