China's yuan jumps as Trump delays tariffs

China's yuan jumps as Trump delays tariffs

14 Aug 2019 11:29 AM
 

China's yuan jumped against the dollar on Wednesday as Washington's decision to delay tariffs on Chinese exports eased worries over the trade war and pressure on the currency.

But with fresh economic data pointing to a further slowdown in China's economy, and lingering uncertainty around Sino-U.S. trade progress, analysts predict further yuan weakening over the coming year.

U.S. President Donald Trump on Tuesday backed off his Sept. 1 deadline for 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods. The announcement was made following renewed trade discussions between U.S. and Chinese officials. The comments, apparently aimed at easing fears of persistent yuan devaluation, come amid fresh signs of economic stress.

Snapping a nine-session losing streak, China's central bank set the yuan's midpoint rate at 7.0312 per dollar prior to market open. At midday, onshore yuan was changing hands at 7.0227, 0.47% stronger than Tuesday's close.

On Wednesday, China reported a raft of unexpectedly weak economic data, including a surprise drop in industrial output growth to a more than 17-year low. Reflecting expectations for fresh government easing, the yield on 10-year Chinese government bonds fell below 3% on Wednesday for the first time since December 2016.

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