The Chinese yuan dropped to its lowest level in a decade on Monday, August 5, amid the news of a shift in the U.S.-China trade war, as data on Bloomberg show.
Around 12:00 GMT, the onshore yuan dropped to 7.03 per U.S. dollar — its lowest level since 2008. At the same time, the offshore yuan plummeted to 7.1 per dollar.
The markets in Asia saw a significant response to the yuan’s drop. Key Asian indexes are in decline, with the Nikkei 225 losing 1.7% on the day; Hang Seng and Shanghai Composite are down 2.9% and 1.6%, respectively. Other Asian Pacific markets, such as Singapore and South Korea, are also in the red.
The Chinese yuan reached its historical high of 1.53 against the dollar in January of 1981, while the all-time low of 8.73 was registered in January of 1994.
The drop comes several days after the U.S. President Donald Trump announced new tariffs on $300 billion worth of Chinese exports, as the negotiations with the officials in Beijing were reportedly deadlocked. Starting September 1, all $660 billion worth of goods that are exported from China to the U.S. will be subject to increased tariffs.
The trade war between the two countries started in early 2018, when Trump directed the U.S. trade representative to impose 25% tariffs on $50 billion worth of Chinese goods. Beijing later responded by imposing increased tariffs on 128 U.S. goods. As of June 2019, China was raising tariffs for the U.S., while gradually lowering them for other countries.