China’s central bank fixed the yuan midpoint at 7.0211 per dollar on Monday, Aug. 12, marking the third session in a row its midpoint rate is weaker than 7 yuan per dollar, CNBC reported.
China continued to set the official midpoint reference for the yuan below the psychologically significant level despite worries it could escalate tensions with Washington.
The Trump administration acted quickly, declaring China as a currency manipulator right after it depreciated the yuan past 7 per dollar last Monday for the first time since the global financial crisis in 2008.
A weaker yuan could make China’s exports cheaper and give it a trade advantage against the United States.
The devaluation of the yuan is considered a retaliatory measure by China after President Donald Trump announced new tariffs on $300 billion worth of Chinese imports starting in September, on top of existing tariffs of $250 billion worth of goods, following negotiations between U.S. and Chinese officials in which no progress was made.
In a speech last Friday, President Trump asserted he was not ready to strike a trade deal with China, and planned September talks between the two countries could be called off.
On Saturday, the president repeated a claim that China is stealing hundreds of billions of dollars from the United States and may be hoping for a Democrat to win the presidential election next year to continue its “ripoff of America.”
“China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs, they must stem the flow. At the same time China maybe hoping for a Democrat to win so they could continue the great ripoff of America, and the theft of hundreds of Billions of dollars!” President Trump wrote on Twitter.
China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs, they must stem the flow. At the same time China may be hoping for a Democrat to win so they could continue the great ripoff of America, & the theft of hundreds of Billions of $’s!
— Donald J. Trump (@realDonaldTrump) August 10, 2019
With the yuan being kept weaker than 7 per dollar, China is showing itself to be a currency manipulator. In its decision to designate China as a currency manipulator, the U.S. Treasury Department explained that Beijing has recently taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past.