China hasn't manipulated its currency — International Monetary Fund contradicts Trump

China hasn't manipulated its currency — International Monetary Fund contradicts Trump

Meanwhile, Australian dollar, a closely-monitored indicator for the health of Chinese economy added 0.55 percent to $0.6797 after dwindling to a record low figure of $0.6677 on Wednesday (August 7th), while crude-oil price dependent Canadian Dollar added 0.54 percent to $1.3234.

The beginning of the global financial crisis is here as the two biggest economies in the world are on a collision course.

"Uncertainty is what we have", Carone said. A weaker yuan would give Chinese exporters a competitive price advantage over foreign rivals.

However, ING cautioned there is a chance the yuan could fall further if the trade war continues to escalate.

The central bank on Thursday set the starting point for the yuan's daily trading at 7.0039 to the US dollar - the first time since 2008 that the level was set below the politically sensitive level of seven to the dollar.

The US dollar (USD) wrapped up its after-hours session just a tad higher versus most of its counterparts late Thursday, but it was the Chinese yuan (CNY) that stole the show after China's central bank fixed the currency and elevated it on a stronger position.

"The Chinese yuan, which has been in the spotlight all week is edging closer to its recent decade-long low", Gorilla Trades strategist Ken Berman said in a note. The yuan was the world's dullest currency only a few weeks ago, even as tensions with the USA on trade suddenly escalated.

The US acknowledged this move of China as currency manipulation and the allegation of US administration on China of being a currency manipulator has made the things worse for this ongoing trade war.

While central banks globally are adopting a more dovish outlook, investors remain anxious. "And in a certain extent, it has helped smoothing market sentiment to avoid panic". "China has devalued its currency by over 10% with the express objective of neutralizing tariffs, full stop". It burned through $1 trillion in reserves before it steadied. The move, reversing its decision in May to keep China off the blacklist, came after Beijing's central bank let the yuan drop to its lowest point in 11 years. He tweeted, "Massive amounts of money from China and other parts of the world are pouring into the United States for reasons of safety, investment, and interest rates!"

The yield gap between Chinese and USA benchmark 10-year government bonds stood at 134 basis points on Friday afternoon, compared with a low of 28 basis points hit in November.

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