BEIJING – Foreign exchange in the country reached 7.0326 yuan per dollar. This is the lowest level of the Chinese currency since March 2008.
The People’s Bank of China, as the country’s central bank is called, has reduced its currency’s reference rate by 115 basis points.
At the new level, the yuan fell 0.16%, although it is stronger than predicted after the regulator had made four consecutive devaluations since early August.
Normally, the country’s financial authorities maintain a daily 2% change in currency. This practice is adopted so that, in case of a variation of more than 2%, it is determined if the currency is being deliberately manipulated, Reuters reported.
The Chinese government had lowered its currency to 7 yuan per dollar on the 5th of this month. This was called “monetary manipulation” by US President Donald Trump. The president referred to the 5% devaluation of the Chinese currency since February, as reported by The Washington Post.
China and the US are waging a trade war. The devaluation of the yuan was another chapter of this war, soon after the US announced a tax on products from the Asian giant.
Meanwhile, US bank Goldman Sachs warned on Sunday of the risk of economic recession in the United States.
Fears of a recession, according to the bank, are mounting due to the unfolding trade war between China and the US. The bank also linked this heightened fears to the diminishing chance of a deal between the two countries before the US presidential election in 2020.
US President Donald Trump announced on August 1 that he would apply 10% tariffs on $300 billion in imports of Chinese products. In response, China has suspended the purchase of US agricultural products. The Chinese currency also depreciated, raising charges of currency manipulation .
According to published Reuters, Goldman Sachs said it lowered its US growth forecast for the 4th quarter of the year, reducing to 1.8% – down 0.2%.
The note, according to Reuters, also warns that there is a risk of diminishing domestic activity of US companies.