Yuan passes 7 per dollar for the first time in three months
Investor sentiment rises with hope for a limited trade deal
China’s currency the renminbi or yuan (CNY) has surpasses its key benchmark and reached its highest level since early August.
The yen surpassed 7 per dollar for the first time in 3 months as investors grew increasingly hopeful of a limited trade agreement between the US and China, standing at 6.99903 in early afternoon trading.
The ongoing trade war between the world’s two largest economies has greatly affected investment in the past two years. US President Donald Trump initiated the dispute in an effort to redress the country’s trade imbalance with the emerging Asian superpower.
Washington limited the ability of major Chinese technology companies, such as Huawei and ZTE, to do business with American firms and introduced tariffs on a number of key industries. Beijing retaliated in kind by announcing heavy tariffs on US auto-imports and agricultural goods. Although less wide ranging than American tariffs, these measures strategically targeted areas key to Donald Trump’s reelection in 2020.
In August the US Treasury Department formally designated China as a currency manipulator. This announcement came after the People’s Bank of China (PBC) allowed the yuan to weaken past 7 for the first time in more than 11 years.
Yuan’s restoration below 7 per dollar has indicated to investors China’s sincerity in securing a limited “phase one” trade deal, which would reduce US tariffs.