The offshore yuan depreciated past 7.27 per dollar, extending its losses for a second consecutive session, as the US dollar strengthened following President Trump's latest tariff threats.
Yuan falls against US dollar
The renewed pressure on the yuan came amid heightened trade tensions, with investors growing increasingly concerned about the potential economic fallout from escalating US-China disputes.
On Wednesday, Trump hinted at plans to impose 25% reciprocal tariffs on European autos and other goods, while also revealing that tariffs on Mexico and Canada would be postponed until April 2, extending the looming levies by one month. The uncertainty surrounding trade policy weighed on market sentiment, pushing investors toward the relative safety of the US dollar.
Tariff threats hit forex market
Further pressuring the yuan, reports emerged that the Trump administration plans to tighten chip export controls on China, expanding restrictions on access to advanced semiconductors and critical US technology. This move follows previous measures aimed at limiting Chinese investments in strategic US sectors, underscoring Washington's increasingly tough stance on Beijing’s technological ambitions. The prospect of further curbs on China's tech sector added to concerns about slowing economic growth and potential retaliatory measures from Chinese policymakers.
Meanwhile, market participants are closely watching for concrete actions from Chinese officials after the recently concluded National People’s Congress emphasized the need to bolster the private economy, restore business confidence, and stabilize financial markets. Despite reassurances from policymakers, investors remain cautious, awaiting further stimulus measures or policy support that could help counteract external pressures.
Looking ahead, traders will monitor upcoming economic data releases from China, including industrial production and retail sales figures, for signs of economic resilience. Additionally, any signals from the People’s Bank of China regarding currency intervention or monetary policy adjustments will be key in determining the yuan's near-term trajectory.
