China’s currency hits 16-month low on Trump tariff fears
China’s currency weakened to a 16-month low as the potential for sharp tariff hikes by the incoming Trump administration raised concerns about the growth prospects of the world’s second-largest economy.
Terrestrial renminbi: The dollar fell 0.1 percent to Rmb7.34 on Wednesday, the weakest since September 2023, despite the People’s Bank of China keeping interest rates steady ahead of Donald Trump’s inauguration this month.
China’s currency is allowed to trade within 2 percent of the daily exchange rate set by the central bank, and the exchange rate is approaching the lower end of that trading band.
The selling pressure partly reflects fears that Trump’s proposed high tariffs on Chinese goods will force the PBoC to weaken the renminbi to offset their impact on exports, which have helped the country maintain economic growth amid weak domestic consumer demand.
“The market is impatient and wants to blow up the renminbi,” said Wee Khun Chong, senior markets strategist at BNY.

On Wednesday, the PBoC announced a daily fix of Rmb7.1887 against the dollar, little changed from Tuesday’s fix of Rmb7.1879.However, pressure on the exchange rate increased after strong US economic data on Tuesday data lifted the dollar.
The selling pressure on the renminbi is “essentially a reflection of the Trump trade,” said Ju Wang, head of foreign exchange and exchange rate strategy at BNP Paribas. . we feel that a lot has gone up in price, but the market doesn’t want to give up.”
Wang said the PBoC appeared to be in “wait and see mode”.
The central bank wants to keep the exchange rate steady as it waits for more clarity on Trump’s trade policy, analysts said, adding that any slight easing of the fix could risk further selling of the Chinese currency.
Trump has said he will impose tariffs of up to 60 percent On China.
Chinese stocks also fell on Wednesday, with mainland China’s CSI 300 index down 0.3 percent and Hong Kong’s benchmark Hang Seng down 1.1 percent.