The offshore yuan weakened to around 7.28 per dollar, reversing the strong 1.1% gain from the previous session, as the U.S. dollar rebounded following news of President Trump’s trade policies.
Offshore yuan slips on Trump tariff threats
In his inaugural address, President Trump proposed 25% tariffs on Mexico and Canada and hinted at tougher tariffs on China. He mentioned that tariffs on China could depend on a deal regarding TikTok’s ownership while extending TikTok’s U.S. operations for an additional 75 days.
At the same time, the yuan found some support due to hopes of potential U.S.-China negotiations, with Trump reportedly expressing interest in visiting China after taking office.
More proactive macroeconomic policies ahead
Furthermore, President Xi Jinping urged policymakers to adopt more proactive macroeconomic policies this year to sustain economic growth. The People’s Bank of China kept its key lending rates unchanged in January, maintaining the one-year Loan Prime Rate (LPR) at 3.1% and the five-year LPR at 3.6% to support economic stability amidst external uncertainties.
