As U.S. President-Elect Donald Trump raised concerns about potential taxes on Chinese goods, the Chinese yuan depreciated against the U.S. dollar during Tuesday’s European session.
As they wait for guiding clues from the important U.S. inflation report later this week, markets are anxious as they try to understand U.S. President-elect Donald Trump’s policy promises, which include higher tariffs.
The yuan dropped from its early high of 7.2180 against the US dollar to a low of 7.2417, which was almost three and a half months ago. The yuan was worth 7.2139 versus the US dollar at the end of yesterday.
The 7.23 zone is probably where the yuan will find support if it continues its downward trajectory.
The yuan can fluctuate by up to 2% from the official parity rate, which is established by the Chinese central bank every morning.
Conclusion
The recent drop in the Chinese yuan against the U.S. dollar reflects investor concerns over President-elect Trump’s possible tariffs on Chinese goods, signaling economic tensions between the U.S. and China.
Trump’s tariff proposals have injected uncertainty into markets, as investors await further economic indicators—like the U.S. inflation report—that may shed light on potential policy impacts.
The yuan’s current vulnerability, hovering near the 7.23 support level, underscores how sensitive it is to geopolitical signals. If these proposed tariffs materialize, the yuan could see sustained pressure, potentially impacting broader global trade dynamics and influencing central bank interventions.