China responded to President Donald Trump about his tariff threats of another escalation of the trade war on Monday, allowing the yuan to drop to its weakest level in more than a decade and asking state-owned companies to suspend imports of US agricultural products. The yuan rate at auction on the exchanges of mainland China on Tuesday fell to a minimum for 11 years – 7.0699 per dollar.
Beijing on Monday revealingly allowed the currency to break the 7 per dollar mark for the first time since late 2008 after U.S. President Donald Trump announced a decision to impose a 10% duty on Chinese imports worth $ 300 billion, breaking the ceasefire in the trade war. Analysts assessed China's actions as a signal that the country does not intend to make concessions. This means that the trade war which has already affected global economic growth will only be tightened.
The United States officially called China a currency manipulator, and NBC began to restrain the strong rate of depreciation of the national currency. China has taken steps to slow down the falling of the yuan, as the effects of the depreciation on Monday continued to put pressure on the market. The National Bank of China has established a daily currency fix stronger than analysts expected and announced the planned sale of bonds in RMB in Hong Kong. These steps, taken a few hours after the United States called the country a currency manipulator, helped to boost the offshore yuan.