On the first trading day of 2025, China’s yuan fell to its lowest level in 14 months, but it swiftly recovered from lows of 7.31 to the dollar, which traders believe may be a sign that authorities want to stop the currency’s decline before Donald Trump retakes office. At market opening, the onshore yuan dropped to 7.31 to the dollar, breaking below 7.3 for the first time since November 3, 2023. Later on, though, trades below that threshold vanished from trading platforms.
China’s currency market regulator said both trading counterparties canceled their orders at 7.31 per dollar in response to a Reuters request for comment. The reason the orders were canceled was not disclosed by the regulator.
According to analysts and traders, the cancellation may have been caused by a “fat finger” mistake or by regulatory directives intended to maintain the yuan’s stability in the face of an impending trade war with the US. According to a trader at a Chinese bank, the cancellation demonstrates that “authorities think keeping the yuan stronger than the 7.3-per-dollar level at this stage is reasonable.”
The trader, who wished to remain anonymous, stated that China must carefully monitor US policies under Trump and modify countermeasures, including currency policy, accordingly. Investors are worried about how the US president-elect’s promise to slap further taxes on Chinese imports could affect assets denominated in yuan.
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