The Chinese yuan falls more than 7 dollars per dollar while the escalation of the trade war raises economic fears | Money

TOKYO, Aug. 5 – The Chinese yuan has slipped against the US dollar today, weakening for the first time in more than 10 years, above the key level of $ 7 per dollar, as pressure mounted on the second world economy. US President Donald Trump knocked out Thursday financial markets by promising to impose tariffs of 10% on the remaining US $ 300 billion (1.25 trillion RMB) of Chinese imports as of September 1, brutally breaking the ceasefire since the meeting with Chinese President Xi Jinping at the G20 summit in June.

After opening the session ashore at 6.9999 for a dollar, the yuan had weakened to 7.0240 for a dollar at 15:55 GMT, the first time that it had crossed the 7-level for since May 9, 2008.

The yuan's decline came after the People's Bank of China (PBOC) set the median of the yuan's daily trading band at 6.9225 to the dollar, its lowest level since December 2018.

The offshore yuan also fell, reaching a record low against a dollar of 7.1094 before bouncing back to 7.0655 around 0200 GMT.

The upsurge in trade tensions has revived worries in global financial markets about China's room for maneuver on the weakening of the yuan to offset increased pressure on its exporters.

However, Frances Cheung, head of macroeconomic strategy for Asia at Westpac in Singapore, said that "some depreciation of the renminbi is not going to help thwart a lot of the money. tariff impact, taking into account high duty rates. "

"With the addition of additional tariffs, the PBOC should provide more facilities to support growth," she added.

Analysts have previously said the authorities would control depreciation due to concerns about potential capital outflows.

Shares also fell, with a sharp drop in Hong Kong shares weighing on the overall market, said Gerry Alfonso, director of Shenwan Hongyuan Securities Co, in a comment sent by email.

Hong Kong's Hang Seng Index was 1.6% lower, as the city expected a major business disruption as a general strike threatened to paralyze part of the Asian financial center.

The benchmark Shanghai Composite Index lost 0.44% and the CSI300 first-order index lost 0.5%.

"The announcement of the move to CNY 7 is also putting pressure on FX-sensitive sectors, such as airlines," Alfonso said. – Reuters