The Chinese currency fell to its lowest level in 16 months, as the prospect of sharp tariff hikes by the incoming Trump administration increases selling pressure on the renminbi.
Wild RMB It fell 0.1 percent to 7.34 renminbi to the dollar on Wednesday, its weakest level since September 2023, despite the People's Bank of China maintaining a steady stabilization rate ahead of Donald Trump's inauguration this month.
The Chinese currency is allowed to trade within 2 percent of the daily rate set by the central bank, and the exchange rate is close to the lower end of this trading range.
“The market is impatient and wants an explosion in the value of the renminbi,” said Wei Khun Zhong, chief market strategist at the Bank of New York.
On Wednesday, the People's Bank of China (PBoC) announced a daily fixing rate of RMB7.1887 to the dollar, almost unchanged from Tuesday's fixing rate of RMB7.1879. But pressures on the exchange rate escalated after strong US economic data pushed the dollar higher on Tuesday.
The selling pressure on the renminbi is “essentially a reflection of the Trump trade,” said Joe Wang, head of foreign exchange and interest rates strategy at BNP Paribas. “The market has been doing this since the US elections… We feel a lot has been priced in, but the market doesn't want to give up.
Analysts said the central bank wants to maintain a stable exchange rate while it waits for more clarity on Trump's trade policies, adding that any slight easing of the reform could risk a bigger sell-off in the Chinese currency.
Trump has said he will do so Imposing 60% tariffs on China On his first day in office.
