We are witnessing two powerful countries inside an economic turmoil bringing special circumstances to a global scene.
Alleging unfair trade practices made by China, US President Donald Trump has threatened the Asian giant with tariffs on hundreds of billions of dollars on its exports, and without reluctance Beijing has promised the same. The Renminbi (aka the Chinese Yuan) has fallen more than 3% against the dollar in the past months as tensions between the world's two biggest economies have gone deeper, both sides have threatened waves of new taxes on each other.
Another reason is the strength of the US economy, which has led the US Federal Reserve to raise interest rates this year making US dollar assets more attractive for international investors, pushing up the value of the green cash in comparison with other currencies.
China's Central Bank is on its way to a different path, setting more than $100 billion into its financial system despite concerns about the health of the economy.
One dollar now buys more than 6.88 yuan, the Chinese currency's lowest level since December, as it had spent most of 2017 and the start of this year strengthening against the dollar.
Reciprocal trade prices by China helped give the U.S. dollar a moderate rise recently, while the Sterling fell to a 11-month low, related to fears about Britain's exit from the European Union. China is putting additional import tariffs of 25 percent on $16 billion worth of U.S. goods involving oil, steel products, cars and medical equipment, the commerce ministry said that it was in response to the United States decision to impose 25 percent tariffs on another $16 billion of Chinese products starting on August 23.
But does China’s currency low rates have any benefit? Experts claim that a lower Yuan could make China's big export industry a huge competitor worldwide, making its products affordable for buyers who pay in dollar bills. Trump has frequently accused China of manipulating its currency value before. Trade tensions have been considered positive while the U.S. economy is seen in a better place to manage these disputes on emerging markets.
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