China’s central bank faces mounting pressure to relax its tight control over the yuan as Trump’s trade tariffs threaten to impact exports.
Analysts from ANZ Banking and Malayan Banking expect the PBOC to allow the yuan’s daily fixing to weaken past 7.2 per dollar, a level carefully defended since Trump’s election.
The offshore yuan has already touched 7.3734, its lowest since October 2022, though it recovered after Trump indicated willingness to negotiate. Goldman Sachs projects the onshore yuan could reach 7.4-7.5, suggesting a potential 3.4% decline. While currency depreciation could help offset tariff impacts, China must balance this against risks of capital outflows and US accusations of manipulation.
The situation remains fluid, as demonstrated by the peso and Canadian dollar’s rebound after Trump delayed tariffs on Mexico and Canada following border control agreements. Beijing reportedly plans to pledge against competitive devaluation, highlighting the complex dynamics between trade policy, currency management, and international relations.
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