A weakening yuan is testing Beijing's resolve as Trump's return fuels tariff worries

The Chinese yuan is expected to depreciate against the strong U.S. dollar, raising concerns about the extent of the currency’s potential decline and its global impact on export competitiveness and Chinese economic growth. Market shifts following Donald Trump’s election victory have already led to a 3% drop in the offshore yuan and a 16-month low for the onshore yuan, with investors wary of China’s economic challenges and a possible rise in U.S. interest rates. As U.S. Treasury yields rise and the dollar strengthens, the Federal Reserve’s reduced rate cut expectations have widened the yield gap between U.S. and Chinese bonds, driving the dollar up and the yuan down.

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