By Stanley White
TOKYO (Reuters) – China’s fell to an all-time low on Tuesday after the Trump administration labeled Beijing a currency manipulator, marking a sharp escalation in the bruising trade war between the world’s two largest economies.
The move also pushed the dollar down against the yen and the euro while U.S. stock futures fell on worries the trade conflict with China would hurt U.S. economic growth and corporate profits.
U.S. Treasury Secretary Steven Mnuchin said in a statement on Monday the government had determined that China is manipulating its currency and that Washington would engage with the International Monetary Fund to eliminate unfair competition from Beijing.
The U.S. action comes after China allowed its yuan to weaken past the key 7-per-dollar level on Monday for the first time in more than a decade, following Trump’s decision to impose 10% tariffs on $300 billion of Chinese imports, ending a month-long trade truce.
“Trump has already hit China with so many tariffs, we’re not certain what else can he do now that he’s declared China a currency manipulator,” said Takuya Kanda, general manager of research at Gaitame.Com Research Institute in Tokyo.
“The trade war has entered a new phase and we are very unsure what comes next. This type of uncertainty will keep the yuan weak and the dollar weak versus the yen.”
The offshore yuan fell to 7.1265 per dollar, an all-time low.
The dollar fell 0.3% versus the yen to 105.61. The greenback earlier slipped to 105.51 yen, the lowest since a flash crash in January that roiled currency markets.
The euro () rose 0.3% versus the dollar to $1.1238, its strongest level since July 19.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.