Renminbi holds ground after US labels China currency manipulator
The renminbi held steady on Tuesday morning in line with Beijing’s pledge to ensure the currency’s stability and despite the US labelling China a currency manipulator on Monday.
The onshore renminbi edged down 0.1 per cent to 7.0585 a dollar after the Chinese central bank set the midpoint for the renminbi’s trading band at 6.9683, the lowest level in more than eleven years. The onshore renminbi is permitted to trade 2 per cent in either direction around the daily midpoint.
Analysts say that although China may be willing to see the renminbi weaken against the dollar, authorities will step in if the pace of depreciation accelerates enough to risk spurring capital outflows.
On Monday evening in Beijing, Yi Gang, governor of the People’s Bank of China, said in a statement that China would ensure the currency’s “fundamental stability” and “will not engage in competitive devaluation”.
The US Treasury labelled China a currency manipulator late on Monday, just hours after President Donald Trump again accused China of weakening its currency to create an unfair trade advantage.
The designation came after China let the renminbi weaken to under Rmb7 to the dollar on Monday, shaking global markets as investor concerns mounted about the impact of escalating US-China trade tensions.
Beijing acted after Mr Trump on Friday announced plans to impose tariffs on another $300bn of Chinese goods, upending a truce with Chinese president Xi Jinping reached in June.