Commercial War: China reacts, devalues ​​the yuan and brings it to 7-1 against the dollar

The value of the yuan in the offshore (parallel) market was 7.0282 to the dollar, after falling 1.26% from last Friday. This represents its lowest level since 2010.

The steps

The yuan is not fully convertible and the Chinese central bank is setting a daily exchange rate of 6.9225 per dollar on Monday, after declining 0.33 percent since Friday.

But markets drove down the value of the Chinese currency, which fell to 7.11 for a dollar after the opening of markets, but then rose slightly after possible intervention by the Chinese central bank.

This institution said in a statement having "the experience, the confidence and the ability to keep the yuan exchange rate at a reasonable and balanced level".

The American president, Donald Trump, He has repeatedly accused Beijing of artificially devaluing its currency to promote its exports. But the Federal Reserve, after investigating this issue, gave up accusing China of manipulating its currency. China and the United States are immersed in a commercial war For more than a year, this has resulted in a tariff increase that has affected trade valued at $ 360,000 million a year.

A decline in the yuan would boost Chinese exports and reduce the impact of rising US tariffs on Asian giant products.

Trump reiterated last Thursday his commercial threats in Beijing announcing that from September 1, he intended to extend the increase in tariffs to almost all imports Chinese.

"The Chinese government could be allowed to further reduce the yuan to support its growth" while the trade war hampers the economic prospects of the Asian giant, says Ken Cheung, an badyst at Mizuho Bank.

Until now, Beijing has kept its currency at stable levels to "not compromise" trade negotiations with the United States, said Julian Evans-Pritchard, Capital Economics firm.

But Monday has exceeded the value of seven yuan to one dollar, which shows that the Chinese authorities "abandoned all hope of concluding a trade agreement" with Washington, adds Evans-Pritchard.

The president of the Chinese Central Bank had said in March that he "would never use exchange rates" as a tool "in the trade war.

Beijing has been trying to stabilize the value of its currency since 2015 to protect its foreign exchange reserves and avoid major capital leaks.