Yuan Weakens Amid PBOC Rate Cut, Trade Tensions with Europe Rise
China's yuan has weakened against the US dollar after the People's Bank of China set a lower guidance rate for the first time in 11 sessions. This move is seen as a response to growing trade tensions with Europe, which could slow Chinese exports.
The onshore yuan traded at 6.7050 midday, down 0.07% from the previous day's close. The PBOC set the mid-point rate at 6.7468, breaking a 10-session strengthening streak. This rate is 497 pips weaker than a Reuters estimate.
The dollar index has risen for three days and is near an eight-week high. Some experts believe that the planned meeting between Chinese and US leaders in Washington on September 24 may signal an extension to their trade truce, which was struck last year to avoid a major shock to the global economy.
However, trade tensions with Europe are increasing, with the European Central Bank saying that China's industrial transformation is squeezing out European firms from global markets. German companies have been among those most affected.