THE US has accused Beijing of currency manipulation after the Chinese yuan dropped to its lowest level in more than 10 years.
The rate now sits at below seven yuan to the dollar — the first time it has fallen so far since the Global Financial Crisis. Beijing has previously tried to stop the currency falling below the symbolic seven-yuan level, but the trade war sparked by US tariffs is thought to have changed the country’s policy.
US President Donald Trump has imposed a 10 percent tariff on imported Chinese goods worth $300bn (£246bn). China says the US tax on trade “seriously undermined international rules” and damaged the global economy. The state-controlled People’s Bank of China (PBOC) has blamed the yuan’s slump on unilateralism, trade protectionism and the tariff increases.
The US sees the plummeting yuan as evidence of an attempt by China to offset the impact of the tariffs. The yuan is not freely traded, and Beijing usually limits its movement in relation to the greenback.
Chinese exports will in theory become more competitive with a weaker yuan, and less expensive in foreign currencies.