The Chinese yuan fell to a four-month low against a strengthening dollar on Monday, as Asian currencies continued to tumble in response to US President-elect Donald Trump’s latest threat to impose 100% tariffs on BRICS nations.
The warning, made on Sunday, sparked a wave of anxiety about potential disruptions in global trade and undermined confidence in risk-driven markets, causing the dollar to strengthen. The Australian dollar, New Zealand dollar, and Singapore dollar also fell against the US currency, while the Japanese yen and South Korean won dropped. The Indian rupee, however, rose to a record high despite concerns about slowing economic growth.
The yuan’s weakness came despite positive data on China’s purchasing managers’ index, which indicated a modest recovery in factory output. However, concerns remain about the impact of rising trade tensions on Chinese exports.
Meanwhile, the dollar started the week on an upbeat note, with investors expecting a slower rate cut path from the Federal Reserve. The US central bank is set to release its monetary policy decision on Wednesday, while key US data for November is due later in the week. The Reserve Bank of India is also set to make a decision on interest rates on Friday, with many expecting no changes.
The currency moves came as global markets responded to Trump’s threat, which followed his previous vow to impose higher tariffs on goods from China, Mexico, and Canada. The warning has sparked fears of a renewed trade war between the world’s largest economies.