Beijing: The Chinese yuan on Friday weakened against the US dollar, which was pushed up by American President Donald Trump’s tax cut plan. The central parity rate of the yuan stood at 6.8819 against the US dollar, weakening from 6.871 on Thursday, according to the China Foreign Exchange Trade System. The White House said Trump plans to unveil comprehensive tax reforms in the next few weeks to lower the overall tax burden, which boosted US stock prices and sent the dollar higher against a basket of currencies, Xinhua news agency reported. US jobless claims fell to near a 43-year low and wholesale inventories surged for a second straight month, suggesting improved confidence in the economy. Despite slipping against the dollar, the yuan’s exchange rates too many other major currencies strengthened, including the euro, Japanese yen, British pound, Australian dollar and Swiss franc.
Analysts believe the yuan is seeing less depreciation pressure and will likely remain generally stable in the short term due to lingering uncertainties on the US dollar and policies from the Trump administration. China’s central bank has raised lending costs for major banks and, for several days, suspended injecting liquidity into the money market, moves expected to further ease pressure on the yuan and foreign exchange reserves. In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 per cent from the central parity rate each trading day. The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.
