Chinese currency hits 16-month low on Trump’s tariff concerns

The Chinese currency fell to its lowest level in 16 months, as the prospect of the incoming Trump administration imposing sharp tariff hikes raised concerns about the growth prospects of the world’s second-largest economy.

Wild RMB It fell 0.1 percent to 7.34 renminbi to the dollar on Wednesday, its weakest level since September 2023, despite the People’s Bank of China maintaining a steady stabilization rate ahead of Donald Trump’s inauguration this month.

The Chinese currency is allowed to trade within 2 percent of the daily rate set by the central bank, and the exchange rate is close to the lower end of this trading range.

The selling pressure partly reflects concerns that steep tariffs on Chinese products proposed by Trump would force the People’s Bank of China to weaken the renminbi to offset their impact on exports, which has helped the country maintain economic growth amid weak domestic consumer demand.

“The market is impatient and wants an explosion in the value of the renminbi,” said Wei Khun Zhong, chief market strategist at the Bank of New York.

The People’s Bank of China (PBoC) on Wednesday announced a daily fixing rate of RMB7.1887 to the dollar, almost unchanged from Tuesday’s fixing rate of RMB7.1879. But pressures on the exchange rate escalated after strong US economic data pushed the dollar higher on Tuesday.

The selling pressure on the renminbi is “essentially a reflection of the Trump trade,” said Joe Wang, head of foreign exchange and interest rates strategy at BNP Paribas. “The market has been doing this since the US elections… We feel a lot has been priced in, but the market doesn’t want to give up.

The People’s Bank of China appears to be in a “wait-and-see mode,” Wang said.

Analysts said the central bank wants to maintain a stable exchange rate while it waits for more clarity on Trump’s trade policies, adding that any slight easing of the reform could risk a bigger sell-off in the Chinese currency.

Trump has said he will do so Imposing customs duties of up to 60 percent On China.

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