The country has imposed steep tariffs on U.S. imports in response to similar U.S. action. Though U.S. President Donald Trump said he would temporarily lower duties recently imposed on dozens of countries, he increased those on China goods.
“Until a deal is announced or a big, bilateral meeting confirmed, USD/CNY will now be the focal attention of the FX market.”
The central bank will not allow sharp yuan declines and has instructed major state-owned lenders to reduce dollar purchases, people with knowledge of the matter told Reuters.
Its offshore counterpart was at 7.3592 at 0313 GMT, down 0.17%. It hit an all-time low of 7.4288 on Tuesday.
The central bank has been lowering the midpoint at a measured pace, with Thursday's cut contributing to the day's decline, traders said.
The bank is focusing on a steady yuan even as the trade war challenges the competitiveness of China's export sector, indicating that stability remains the priority.
China will only allow gradual depreciation as stability matters for confidence in Chinese assets, and the tariffs are “just too big to be offset by FX depreciation,“ they said.
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