Chinese yuan fell against dollar hitting its lowest level since 2007

The Chinese yuan fell today to its lowest level against the dollar since the global financial crisis in late 2007, as the central bank lowered its forecasts for the sixth consecutive trading session, amid escalating trade tensions between China and the United States.

China imposed heavy tariffs on US imports in retaliation for similar US measures. Despite US President Donald Trump’s announcement that he would temporarily reduce the tariffs recently imposed on dozens of countries, he increased tariffs on Chinese goods.

“The US and China are currently engaged in a dangerous game of power competition…until a deal is announced or a major bilateral meeting is confirmed, the dollar and the Chinese yuan will now be the focus of attention in the foreign exchange market,” said Chris Turner, head of global markets at ING Bank.

Sources confirmed that the Chinese central bank will not allow sharp declines in the value of the yuan and that it has instructed major state-owned banks to reduce their dollar purchases.