Despite the People’s Bank of China (PBoC) attempts to maintain steady daily fixing rate of China’s currency ahead of Donald Trump’s inauguration, the fears of US tariffs under Trump pushed renminbi to a 16-month low.
The market concerns raised over the potential sharp tariff increases from the incoming US administration resulted in onshore renminbi fall of 0.1% on Wednesday to Rmb 7.34 against the US dollar – lowest since September 2023 – sparking speculations of more lenient approach to currency depreciation by the PBoC.
According to the BNP Paribas’ head of greater China foreign exchange and rates strategy, Ju Wang, “the market has been pricing in these concerns since the US election.”
“The market doesn’t want to give up,” Wang said, adding that the central bank appears to be in “wait-and-see mode.”
Earlier this week, the onshore yuan sank below the 7.3 mark to a 14-month low.
