China’s currency has hit a 16-month low on Trump’s tariffs

China’s currency fell to a 16-month low as the prospect of higher tariffs from the incoming Trump administration threatened growth prospects for the world’s second-largest economy.

The beach Renminbi The People’s Bank of China fell 0.1 percent to Rmb7.34 on Wednesday, the weakest since September 2023, despite a steady rate hike ahead of Donald Trump’s inauguration this month.

China’s currency is allowed to trade within 2 percent of the daily rate set by the central bank, and the exchange rate is approaching the lower limit of that trading band.

The selling pressure partly reflected fears that Trump’s proposed tariffs on Chinese goods would force the PBoC to weaken the renminbi to offset their impact on exports, which have allowed the country to sustain economic growth amid weak domestic consumer demand.

“The market is impatient and wants a blowout in the renminbi,” said Wee Kun Chong, senior market strategist at BNY.

The PBoC announced a daily adjustment rate of Rmb7.1887 against the dollar on Wednesday, unchanged from Tuesday’s adjustment of Rmb7.1879. But strong US economic data weighed on the dollar on Tuesday.

Ju Wang, head of foreign exchange and rate strategy for Greater China at BNP Paribas, said the selling pressure on the renminbi is “basically a reflection of Trump’s trade.” “The market has been doing this since the US election. . . We feel overpriced, but the market doesn’t want to give up.

Wang said the PBOC appeared to be in a “wait-and-see mode.”

The central bank wants to keep the exchange rate stable as it expects more clarity on Trump’s trade policies, analysts said, adding that any adjustment could expose China’s currency sell-off if it is easy.

Trump said he would. It imposes a tariff of up to 60 percent On China.

Chinese stocks also fell on Wednesday, with China’s main CSI 300 index down 0.3 percent and Hong Kong’s benchmark Hang Seng down 1.1 percent.