China central bank sets weakest reference rate for yuan in 11 years
BEIJING, Kyodo - The Chinese central bank on Tuesday set the weakest yuan reference rate against the U.S. dollar in more than 11 years, after the country's currency was sold amid the escalating trade war with the United States.
The People's Bank of China set its daily reference rate at 6.9683, the lowest since May 2008, signaling that the central bank has started trying to bolster exports to shore up the economy. The rate was down 0.66 percent from the previous day.
The yuan is allowed to trade up or down by 2 percent around the reference rate.
On Monday, the U.S. Treasury Department said it has designated China as “a currency manipulator,” in a move that is likely to fuel the trade conflict between the world's two biggest economies.
By lowering the yuan reference rate, China is expected to come under heavier attack from the U.S. administration of President Donald Trump that would make it more difficult for Washington and Beijing to resolve their trade dispute, pundits say.
The weaker yuan usually boosts exports by making Chinese firms' products cheaper in other nations and pushing up the value of overseas revenue in yuan terms.
The yuan on Monday plunged to an 11-year low, breaching the psychologically important level of 7 yuan to the dollar, amid growing fears that China's economy will be further dragged down by the tit-for-tat tariff war with the United States.
Last week, Trump decided to levy 10 percent tariffs on an additional $300 billion worth of Chinese imports after Beijing allegedly failed to make good on its promise to purchase large quantities of U.S. agricultural products.
Earlier this week, Chinese state-run media reported that the country's companies have suspended purchases of U.S. farm products as a retaliatory measure against Trump's plan to raise tariffs further on Chinese imports.
So far, the United States has imposed 25 percent levies on a total of $250 billion worth of Chinese imports in response to Beijing's alleged unfair trade practices involving intellectual property theft and forced technology transfer.
China has retaliated by taxing $110 billion worth of goods from the United States. (Kyodo)