HONG KONG: China's yuan fell against the US dollar on Thursday, as trade frictions between the world's two biggest economies showed no signs of easing.
By 0250 GMT, the yuan was 0.15% lower at 7.3086 to the dollar, 106 pips lower than the previous late session close, and not far from an 18-year trough of 7.3518 hit last Thursday.
The offshore yuan traded at 7.309 yuan per dollar, down about 0.12% in Asian trade.
China’s foreign ministry said on Thursday the country will pay no attention if the United States continues to play the “tariff numbers game”. This comes after the White House outlined how China faces tariffs of up to 245% due to its retaliatory actions.
The yuan is down 0.7% against the dollar this month, under rising pressure from higher US trade levies.
The yuan's slide also comes amid broad US dollar weakness. The dollar index stood at 99.5 on Thursday, and was set to notch a loss for the fourth week in a row as confidence in the dollar has waned amid the Trump administration's trade policy chaos.
“I think Beijing may want to signal to the US its protests on tariffs, and currency weakening is one way of doing it,“ said Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management.
“That said, I think China will still approach this with a lot of care and caution” to contain capital flight risks and trade negotiation with non-US trade partners, he added.
“I’m not that bearish on the yuan, especially if the dollar is depreciating.”
Prior to the market opening, the People's Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.2085 per dollar, 998 pips firmer than a Reuters' estimate.
The PBOC has slightly loosened its grip on the currency since last week by allowing official guidance to weaken past the key threshold of 7.2. However, it still came in much stronger than market projections, which traders interpreted as an official attempt to keep the yuan steady while allowing some flexibility to counteract tariff shocks.
Based on Monday's official guidance, the yuan is allowed to drop as far as 7.3527.
Chinese government 10-year bond yields fell 0.1 basis point to 1.64%. The yield on similar US government benchmark debt was 4.3%.
Key onshore vs offshore levels: * Overnight dollar/yuan swap onshore -5.90 pips vs. offshore -5.90 * Three-month SHIBOR 1.8% vs. 3-month CNH HIBOR 1.8%
