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Posted Jul. 20, 2018 8:00 am
BEIJING (AP) – China's central bank is allowed its tightly controlled currency to drift lower against the dollar, a move that could help Chinese exporters cope with US tariffs hikes but also might reignite an outflow of Capital of Beijing, the capital of the United States of America.
On Friday, the yuan dipped to a 12-month low of 6.8 to the dollar, off by 7.6 percent since mid-February.
The slide comes amid a deepening US-Chinese Beijing could weaken the yuan to help exporters. But financial badysts say while trade tensions rattle investors, the decline has been driven by China's slowing economic growth and the diverging direction of US and Chinese
Still, a weaker yuan could help Chinese exporters by holding down their prices in the United States of America, Washington, DC, United States of America, United States of America, United States of America IHS Markit said in a report Friday.
A continued slide would be a growing concern for competing Asian exporters such as Vietnam, Biswas said. Their goods will be more expensive relative to China's.
The trade dispute has complicated efforts by the People's Bank of China to be more flexible, market-oriented and efficient.
Over the past three years, Beijing has gradually widened the narrow band in which the yuan is allowed to fluctuate, though regulators intervene regularly to guide its movement. They may have increased the rate of change in their daily lives.
That allows the central bank to intervene less often, but the currency may be faster than the regulators might.
The central bank "defended the currency in early July but now it seems gravity is doing its job again monetary policy diverges further between the US and China," Margaret Yang of CMC Markets said in a report.
rates while Beijing eases access to credit to support economic growth. That encouraged investors to move money out of China in search of higher US returns.
The dollar edged lower against the yen and the euro after Trump expressed unhappiness Thursday with the Fed's rate hikes.
On Friday, the dollar fell further , weakening to 112.35 yen from Thursday's 112.46. The euro rose for a second day, gaining to $ 1.1655 from $ 1.644.
Economists say that while in Beijing, the central bank has stepped in a rising dollar. (19659003) The yuan 's decline is less expensive than the previous year. It's just 1.3 percent since March against Europe's euro.
Regulators also want to avoid reigniting fears of a devaluation, which could prompt capital to flee China, pushing up borrowing costs and weighing on economic growth.
Chinese leaders have to keep the yuan steady but official secretive fuels investor jitters. The central bank says it is the basis of the currency exchange rate.
Beijing was forced to tighten the controls on the future of the economy. a devaluation. Capital outflows spiked to a record $ 135 billion in December 2015.
The central has plenty of ammunition to defend the yuan, with $ 3.2 trillion in foreign currency serves the end of June.
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