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USD/CNH: Yuan hits fresh record low in offshore markets

  • Offshore Yuan (CNH) fell to a new lifetime low of 7.14 earlier today.
  • China has weaponized Yuan, the US designates China as a currency manipulator.

China's offshore Yuan exchange rate (CNH) fell to fresh record lows earlier today, having traded through 7 per US Dollar on Monday.

The USD/CNH pair is currently trading at 7.12, having hit a high of 7.14 a few minutes before press time.

The People's Bank of China allowed the USD/CNH pair to rise above the major psychological level of 7.00 yesterday, effectively weaponizing the exchange rate.

In response, the US Treasury has labeled China a currency manipulator, boosting the prospect of a full-blown currency war between the US and China. President Trump may put pressure on the Federal Reserve (Fed) to deliver additional rate cuts before the year-end.

The central bank cut rates by 25 basis points last Wednesday but refrained from signaling further easing, leaving President Trump disappointed.

A day later Trump abruptly announced that the US will impose an additional 10% tariff on $300 billion worth of Chinese goods from Sept. 1.

Apart from allowing the Yuan to depreciate below 7 per US Dollar, China has also asked state buyers to halt purchases of US agricultural products.

With escalating trade tensions leading to currency wars, safe-haven assets like Gold and Japanese Yen could find love.

USD/CNH pivot levels

 

 

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