Yuan falls as Trump hints at new tariffs on Chinese imports
SHANGHAI, Jan 22 (Reuters) - China's yuan fell against the U.S. dollar on Wednesday following President Donald Trump's hint of potential new tariffs on Chinese imports.
Trump said on Tuesday his administration was discussing a 10% punitive duty on Chinese imports because fentanyl is being sent from China to the U.S. via Mexico and Canada. The offshore yuan CNH=D3 eased around 0.2% on the news.
Onshore the spot yuan CNY=CFXS opened at 7.2600 per dollar and was last trading 151 pips lower than the previous late session close as of 0303 GMT at 7.2771 and 1.5% weaker than the midpoint.
"Trump's comments were made in passing. Overall, he tends to be cautious, influenced by factors such as high inflation in the United States, fentanyl, and issues surrounding TikTok, etc.," said Liang Ding, an analyst at research firm Macro Hive.
Ding said that Trump will wait for the results of a review of the Phase I trade deal he signed with Beijing in 2020 to buy some time for dialogue with China.
However, Ding believes the trade relationship between the two countries has evolved from "rebalancing" to "decoupling".
Prior to the market opening, the People's Bank of China set the midpoint rate CNY=PBOC, around which the yuan is allowed to trade in a 2% band, at 7.1696 per dollar, its strongest since Nov 8, 2024 and 946 pips firmer than a Reuters' estimate.
"10% tariffs on China imports would be far below the 60% rate he mentioned in his campaign," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
During Trump's first term as president, the yuan weakened more than 12% against the dollar during a series of tit-for-tat U.S.-Sino tariff announcements between March 2018 and May 2020.
Tan expects U.S. trade protectionism to come to the fore in coming months, but for now the tariff reprieve means that the U.S. dollar is trading on the backfoot, and the onshore yuan will not weaken past 7.35 per dollar before the week-long Lunar New Year holidays starting next week.
The offshore yuan traded at 7.2819 yuan per dollar CNH=, down about 0.17% in Asian trade.
The dollar's six-currency index =USD was 0.046% lower at 108.09.
LEVELS AT 0303 GMT
INSTRUMENT | CURRENT vs USD | UP/DOWN(-) VS. PREVIOUS CLOSE % | % CHANGE YR-TO-DATE | DAY'S HIGH | DAY'S LOW |
Spot yuan CNY=CFXS | 7.2771 | -0.06 | 0.3 | 7.26 | 7.2809 |
Offshore yuan spot CNH=D3 | 7.282 | -0.17 | 0.75 | 7.27 | 7.285 |
(Reporting by Shanghai Newsroom; Editing by Kim Coghill)
((Li.Gu@thomsonreuters.com;))
Related Articles
Why the September Fed Meeting Feels So Strange? The Answer Lies with Miran, Cook and Trump
TradingKey - Beyond analyzing whether the updated dot plot after the Fed’s rate decision reflects a dovish or hawkish tilt, investors are increasingly curious about what will become of the Federal Reserve amid political interference, personnel changes, and potential institutional shifts. The Wall
[U.S. IPO] Oilfield Water Giant WaterBridge Raises $634M in IPO; Can It Repeat LandBridge's 125% Surge?
TradingKey - Oil field water management company WaterBridge (WBI) announced on September 16 that its US initial public offering (IPO) is expected to price 31.7 million shares at $20 per share, raising a total of $634 million.
EUR/JPY strengthens ahead of ECB's Lagarde speech
The EUR/JPY cross attracts some buyers to near 165.75 during the early European session on Tuesday.
EUR/USD Price Analysis: Remains above 1.0800, upper boundary of the descending channel
EUR/USD retraces its recent gains from the previous session, trading around 1.0810 during the Asian hours on Tuesday. A review of the daily chart shows that the pair tests the upper boundary to return to the descending channel pattern. which could reinforce a bearish bias for the pair.
