China’s renminbi rallies as US delays some tariffs
China’s renminbi rallied sharply on Tuesday after the US announced it would delay some tariffs that were set to take effect next month, easing trade tensions.
The offshore renminbi, which trades in financial centres outside of mainland China, strengthened more than 1 per cent against the US dollar to Rmb7.0206 and was eyeing its biggest one-day rise since August 2018.
In intraday trading, the renminbi crossed Rmb7 against the greenback, touching Rmb6.9949, after weakening past that threshold a week ago for the first time since the 2008 financial crisis.
The onshore renminbi, which trades 2 per cent in either direction of a midpoint set by the Chinese central bank, gained around 0.3 per cent to Rmb7.0395.
The rally came after US and Chinese officials discussed trade by phone on Tuesday and agreed to hold further talks in two weeks, easing trade tensions that have rattled global markets.
The Trump administration said it would not impose new tariffs of 10 per cent on a series of Chinese-made consumer goods, such as cell phones, laptops and toys, until December. Some items will be removed from a list of targeted goods entirely, according to the US trade representative.
President Donald Trump had threatened to impose a 10 per cent tariff on another $300bn in Chinese goods beginning September 1, escalating the trade row between the world’s two largest economies. The US also labelled China a currency manipulator after it allowed its currency to cross the key level of Rmb7 to the dollar.
Following the tariff reprieve from Washington, the dollar index — which tracks the greenback against a basket of global currencies — rose 0.4 per cent to 97.752. The Japanese yen weakened more than 1 per cent to ¥106.55