China’s currency, the yuan, slipped to its lowest level in over a decade on Thursday, dropping 0.2% to 7.0749 to the dollar.
The dollar-pegged currency, also known as the renminbi, trades within a band set by China’s government, and earlier this month the band was moved to fight back against President Donald Trump’s newly announced tariffs. A weaker currency makes Chinese exports comparatively cheaper and more attractive, potentially lifting overseas demand and boosting China’s economy.
In turn, the move could affect demand for US exporters, whose goods become comparatively more expensive in China.
The horse may have already bolted the stable, however, according to Mark Williams, a senior Asia economist at Capital Economics.
“The renminbi’s weakness will give a small boost to China’s exporters, and help offset some of the impact of US tariffs,” Williams said. “But we’re beyond the point where exchange rate moves matter much for US producers exporting to China.”
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