China’s yuan fell to its lowest level in 14 months on the first trading day of 2025, but it swiftly recovered from lows of 7.31 to the dollar, which traders believe may be a sign that authorities want to stop the currency’s decline before Donald Trump takes office again.
The onshore yuan plunged below 7.3 for the first time since Nov. 3, 2023, to 7.31 per dollar at market opening. Trades below that threshold, however, subsequently vanished from trading platforms.
Both trading counterparties canceled their orders at 7.31 per dollar, China’s forex market regulator said in response to a Reuters request for comment. The reason for canceling the orders was not disclosed by the agency.
The cancelation may have been caused by a “fat finger” mistake, according to analysts and traders, or by regulatory directives intended to maintain the yuan’s stability in the face of an impending trade war with the US.
The cancellation demonstrates that “authorities believe it is reasonable to keep the yuan stronger than the 7.3-per-dollar level at this stage,” according to a Chinese bank trader.
According to the trader, who wished to remain anonymous, China must keep a careful eye on US policies under Trump and modify its responses, including yuan policy, accordingly.
Investors are concerned about the potential impact on yuan-denominated assets of the US President-elect’s promise to put further taxes on Chinese imports.
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