(Bloomberg) — The yuan fell to the lowest level in about a year versus the greenback, as traders added bearish wagers on lackluster China growth amid risks of higher US tariffs.
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The onshore yuan fell as much as 0.3% to 7.2970 per dollar, weakest level since November 2023. The Bloomberg Dollar Spot Index on climbed toward a two-year high on Tuesday.
The yuan underperformed Asian currencies in November on bets potential US tariffs next year under Donald Trump’s administration will exacerbate China’s economic woes. A raft of stimulus measures from Beijing have failed to impress investors so far and the nation’s residential market remains in a slump.
The People’s Bank of China has been shielding the yuan from rapid declines by setting the daily fixing at stronger than expected levels since Trump’s victory in the US election in early November. On Tuesday, Beijing boosted its support for the currency by issuing a reference rate that had the largest strong bias since August relative to the market’s forecast.
“The yuan weakened on tariff concerns, and while the authorities are capping the fix just slightly stronger than the 7.20 level for now, this may not prevent spot from weakening further,” said Khoon Goh, head of Asia Research at Australia & New Zealand Banking Group.
Analysts expect the yuan to break a 17-year low against the dollar in 2025, with the most bearish observers predicting a decline of around 10%. Currency traders are also assessing the possibility of a Federal Reserve interest-rate cut this month as US hiring probably jumped in November.
(Update with comments and PBOC fixing)
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