Chinese yuan drops to 11-year low

Beijing, Sep 3 (IANS) The Chinese yuan weakened further on Tuesday, dropping to an 11-year low, less than a month after Beijing let the currency pass a threshold it had previously defended.

The yuan crossed 7 per dollar on August 5, days after US President Donald Trump announced tariffs on a wider range of Chinese goods, and has since slid further, as both Beijing and Washington have detailed fresh tariff plans, reports Efe news. 

The currency weakened slightly to close at 7.1785 per dollar on Tuesday, after earlier trading beyond 7.18 for the first time since February 2008. 

In Hong Kong, the yuan dropped to as low as 7.1963 per dollar before recovering slightly. That was a record low in the nine-year history of the offshore currency. 

Currency traders in Shanghai said the weakness had been driven by broader dollar strength and they still believed the central bank would prevent the currency breaching 7.2. 

Typically, Chinese authorities would set down a marker before the currency got so close to a level they wanted to defend. Last week, some traders said state banks had sold dollars to prop up the yuan, especially after the currency pair neared 7.17. 

Some economists think China might need to tolerate further depreciation to offset the effect of coming US tariffs. 

Existing levies on about $250 billion in Chinese goods will be raised to 30 per cent from 25 per cent on October 1, and rates of 15 per cent will be levied on a further set of goods from December 15.