Amid increased pressure from the U.S., including the threat of additional tariffs, China’s currency continued its steep decline this week.
As Markets Insider reported, the Chinese yuan hit a low on Tuesday that was its weakest comparison to the U.S. dollar in 10 years.
The currency was trading at a low of 6.975 per one U.S. dollar this week, a weaker performance than the daily reference rate of 6.9574 per dollar set by the People’s Bank of China.
That low point represented the biggest dip in trading value since May 2008 and came on the heels of new comments from the Trump administration.
According to sources close to the matter cited in a Bloomberg article published Monday, the U.S. is preparing a plan that could impose tariffs on an estimated $257 billion in Chinese imports not already affected in the previous rounds supported by President Donald Trump.
A decision on the additional economic pressure is reportedly contingent on talks between Trump and China’s leader, Xi Jinping.
The unnamed sources said any announcement that might result would likely come in early December, meaning the tariffs could go into effect by February.
So far this year, Trump has approved tariffs on about $250 billion in goods coming from China, an amount that could be more than doubled by the additional tariffs.
White House press secretary Sarah Sanders did not speculate on the possible outcome of trade negotiations between the two nations.
“I’m not going to get ahead of the conversation,” she told reporters on Monday. “You have two of the most powerful leaders in the world. I think that’s consequential no matter how you look at it and we’ll see what happens when they sit down.”
Two days earlier, Trump told a crowd in Indiana that the U.S. is “in the middle of a pretty nasty dispute” with China.
“We’re in a trade dispute,” he said. “I want to use that word because it’s a nice, soft word. But we’re going to win. You know why? Because we always win.”
The trade war has become a common topic of debate ahead of next week’s midterm elections.
Ryan says he’s not a fan of tariffs but the president is using them to get our allies back to the table and they hope to negotiate better deals. They hope that will help lower tariffs. pic.twitter.com/kOQxwU7U42
— Karolina Buczek (@Karolina_Buczek) October 30, 2018
While some experts see the seven-yuan-per-dollar threshold as one that would trigger Chinese officials to step in, others believe the current uncertainty regarding trade with the U.S. could prompt a softer approach.
Some analysts believe the Chinese currency could be trading at 7.4 per U.S. dollar by 2019.
“The yuan’s weakness also reflects lack of confidence as more stimulus means more fiscal deficit, a negative factor in the longer run,” said ForexTime chief market strategist Hussein Sayed.
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