Investing.com – The yuan slipped on Tuesday in Asia as China sets the daily currency fixing at a stronger-than-expected level.
The pair was up 0.1% to 7.0501 by 11:36 PM ET (03:36 GMT).
In a statement, Treasury Secretary Steven Mnuchin said overnight that the U.S. government has declared China a currency manipulator.
The announcement came after China allowed the yuan to fall past the key 7-per-dollar level for the first time in more than 10 years.
The People’s Bank of China (PBOC) said it would “continue to … take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.”
The Treasury statement said the PBOC’s comments “is an open acknowledgement” that the Chinese central bank “has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis,.”
Separately, China also announced that it would stop buying U.S. agricultural products, one day after its state-owned media said Beijing won’t be bullied and would “fight back.”
The move is in retaliation to U.S. President Donald Trump threatening fresh tariffs on essentially all Chinese goods.
The People’s Bank of China set the daily currency fixing at 6.9683 on Tuesday, which was stronger than expected but still weaker than the 6.9925 parity level from Monday morning.
In other news, the central bank also announced today the planned sale of yuan-denominated bonds in Hong Kong. The PBOC will sell 30 billion yuan ($4.26 billion) of such bills in Hong Kong on August 14.
Citing traders, Reuters said the PBOC in the past used issuance in Hong Kong as a way to support levels.
The moves came hours after the U.S. labelled the country a currency manipulator. However, CNBC noted that the label is mostly symbolic and is not likely to lead to formal penalties.
“The PBOC is sending signals that it would like to mitigate yuan depreciation,” said Frances Cheung, head of Asia macro strategy at Westpac Banking Corp. in an interview with Bloomberg. “The offshore yuan had faced resistance around 7.1 intraday a few times. I expect it to hover around this level near term.”
The U.S. dollar slipped 0.1% to 97.203.
The pair jumps 0.3% to 0.6545 after data showed this morning that the country’s jobless rate fell to 3.9% to 4.2% in the previous three months. The unemployment rate is now at the lowest level since mid-2008.
The pair rose 0.5% to 0.6787.
The safe-haven yen fell against the U.S. dollar on Tuesday even after Asian equities traded mostly in the red. The pair rose 0.3% to 106.24.
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