Yuan Increasingly Weak Against the Dollar

The Chinese yuan yesterday dropped to historic lows. The exchange value of the Chinese currency fell to US$0.142 to one yuan, the equivalent of more than seven yuan to the dollar and an 11-year low. While reasons for this include the movement of assets to currencies considered safe havens (like the Japanese Yen), the Chinese central bank was criticized for letting the devaluation of its currency happen instead of stepping in, a gesture interpreted by many as a rebuttal for the new round of tariffs announced by Donald Trump late last week.

The developments point to the possibility of the beginning of a currency war between the two powers and caused stocks to tumble in many international stock markets. Nearly 500 stocks experienced a "Black Monday" in China, using the full capacity of their daily drop limit of 10 percent. 2,800 stocks closed on negative balances.