Trade War Fears Send The Yuan To New Lows
Chinese yuan and shares suffer from increased trade tension between Washington and Beijing. The People’s Bank of China (PBoC) set the rate of the USD/CNY at 6.6166 today, well above the 6.5960 level of Thursday. It was the eighth consecutive day that the yuan was fixed weaker against the greenback. The Chinese currency has lost about 3.4% of its value against the US dollar in June (the biggest fall since the market exchange rate was unified in 1994).
Chinese stocks were also set for their biggest monthly slide since January 2016. The benchmark CSI300 Index (CSI300) increased by 1.15%, while the Shanghai Composite Index (SSEC) gained around 0.8%, though they were down 8.8% and 9.1% for the month.
The US is targeting $34 billion of Chinese goods for tariffs to take effect on July 6, and has threatened tens of billions of dollars more for similar duties. Markets remain concerned about the situation. Meanwhile, an extended selloff in stocks and the yuan could spark a bout of capital outflows, putting further strain on the economy and complicating policy making as authorities put up defenses against the trade battle with the United States.