Chinese stocks and renminbi hit by Trump’s threat to impose 10% tariffs

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The renminbi weakened and Chinese stocks fell after US President Donald Trump said he might impose a 10% tariff on China starting next month.

The CSI 300 index of listed companies in Shanghai and Shenzhen fell 1 percent on Wednesday afternoon. The Hang Seng Index in Hong Kong fell by 1.8 percent, led by a decline in Chinese companies listed in the region.

The offshore renminbi, which trades without restrictions imposed by Chinese financial authorities, fell 0.3 percent on Wednesday to $7.29.

The dollar rose 0.15 percent against a basket of currencies, including the pound sterling and the yen. The price of gold also rose to an 11-week high of $2,758.

China has largely avoided direct attention from Trump during his stormy first day in office, in which he proposed slapping 25% tariffs on the United States’ largest trading partners, Canada and Mexico, prompting traders to cut bets on a resumption of trade. The trade war began in his first term.

Trump said 10 percent tariffs were being considered to punish China for the flow of goods The opioid fentanyl To Mexico and Canada. The United States has accused China of sending chemicals used to make fentanyl to Mexico where cartels use them to manufacture the drug.

It was a repeat of a threat the new president made during his election campaign.

Traders widely expect the US dollar to continue to strengthen against the currencies of major trading partners, including China, as higher tariffs and lower interest rates in China weigh on the global economy. RMB.

About 27 percent of fund managers surveyed by Bank of America said “buying the US dollar” was the busiest trade in January.

Stocks in the rest of Asia were broadly higher on Wednesday. Korea’s Kospi rose 1.3 percent, and Japan’s Topix rose 0.9 percent. Taiwan’s benchmark index advanced 1 percent, while India’s Sensex rose 0.2 percent.

During the presidential campaign, Trump also threatened to impose a separate 60% tax on Chinese imports.