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Yuan slumps to 11-year low against US dollar

This article is more than 12 months old

SHANGHAI/HONG KONG China's yuan fell to an 11-year low against the US dollar yesterday, and stocks dropped as the Sino-US trade war sharply escalated.

Share prices also tumbled in Hong Kong as trade tensions mounted and after a weekend flare-up in violence during anti-government protests.

The onshore yuan slumped as much as 0.7 per cent in the first few minutes of trading to 7.15 per dollar, its weakest since February 2008 and its second biggest one-day drop of the month.

The offshore yuan fell to a record low of 7.1850.

But the currency later pared losses after US President Donald Trump said that he believed Beijing wanted to make a trade deal.

The Chinese authorities have allowed the tightly managed yuan to slide some 3.6 per cent so far this month as trade tensions between Beijing and Washington have worsened, sparking fears of a global currency war.

The benchmark CSI300 Index ended down 1.4 per cent while the Shanghai Composite Index fell 1.2 per cent, with Mr Trump's comments hitting trading screens just before the close.

"This tit-for-tat escalation shows how unlikely a trade deal and de-escalation have become," Mr Louis Kuijs, of Oxford Economics, wrote in a note late on Sunday. Oxford now expects China's economic growth could fall significantly below 6 per cent next year, even after assuming more policy support measures. - REUTERS

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