Yuan dips on fears of China ending trade talks

Amidst fears that China may put an end to the trade talks with US owing to mounting trade tensions, there are now anxieties about a plausible currency war. For the first time since 2008, China’s central bank allowed the yuan to slip below the sensitive seven-to-one dollar level, reaching a six-month low. Commenting on this ‘weaponisation of currency’, Julian Evans Pritchard of Capital Economics opined, “The fact that they have now stopped defending 7.00 against the dollar suggests that they have all but abandoned hopes for a trade deal with the US.” However, there are some economists who believe that China doesn’t want to infuriate US further. Moreover, the fact that Hong Kong is undergoing political turmoil amid civil disobedience and economic disruption has led to increased uncertainty in the region.