China's yuan has recently set a new reference rate at 7.1991 per dollar on November 13, 2024, marking a significant decline to a 14-month low. This adjustment by the People's Bank of China (PBOC) reflects a drop of 0.64 percentage points from the previous day, exacerbated by the political climate following Donald Trump's re-election [58eacc1a].
The yuan's depreciation has been sharp since Trump's victory, with economists predicting further declines, estimating the exchange rate could reach 7.3 by the end of 2024 and 7.6 by the end of 2025. The increase in tariffs on Chinese imports, which could rise by as much as 60%, is contributing to the heightened pressure on the currency [58eacc1a].
Prior to this latest adjustment, the yuan had already been under strain, trading at 7.1367 per dollar on October 29, 2024. The currency had depreciated by 1.6% that month, driven by a strengthening U.S. dollar and rising U.S. Treasury yields, which have made the dollar more attractive to global investors [a64a0c08].
The PBOC's strategy aims to maintain stability in the currency market and prevent excessive fluctuations in the exchange rate. However, the immediate outlook remains challenging as the political landscape in the U.S. continues to impact global financial markets [f21543b4].
As the situation evolves, market participants are advised to remain vigilant regarding the implications of U.S. political developments on the yuan's stability and China's broader economic outlook [5749f97d].