China’s yuan hits lowest level in months as Trump tariff threats roil currencies

China’s currency is losing pace against the US dollar thanks to a wave of uncertainty following Donald Trump’s re-election

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China’s yuan has weakened considerably against the US dollar in the month since Donald Trump won a second term in the White House. Photo: AP

Published: 2:41pm, 3 Dec 2024

Both the onshore and offshore yuan have weakened to their lowest levels in months against the US dollar, as the re-election of Donald Trump as US president has stoked fears of wide-ranging trade disputes and punctured an earlier rally for China’s currency.

As of Tuesday morning, the offshore yuan had dropped around 0.39 per cent, slipping to 7.3148 per US dollar and falling below the 7.3 benchmark.

Meanwhile, the onshore yuan weakened to 7.2975 per US dollar on Tuesday, its lowest reading since November last year.

The People’s Bank of China set the midpoint rate – also known as the fixing rate – to 7.1996 per US dollar on Tuesday, marking a 15-month low.

“The continued depreciation of the yuan reflects a combination of factors, including the strong US dollar, capital outflows and tariff expectations,” Everbright Securities said in a research note on Tuesday.

The yuan has declined since Trump secured a second term as US president last month, reversing earlier gains following an uptick in market sentiment after Beijing began rolling out stimulus measures in late September.

Everbright Securities added that both the yuan and government bond yields are trending back to their pre-stimulus patterns as the effects of the policies wane.