China sets yuan reference rate to 14-month low as Trump win piles on the pressure

Beijing slashed the daily reference rate for its currency to its lowest level in 14 months, as external challenges – including a second term for Donald Trump in the White House – demand a balance between preventing exchange rate overshooting and keeping economic growth stable.

The People’s Bank of China set the midpoint rate – also known as the fixing rate – to 7.1991 per US dollar on Wednesday, down 0.64 percentage points from the day before. The rate indicates the range in which the yuan is allowed to trade for the day, with a 2 per cent appreciation or depreciation permitted outside the midpoint figure.

The onshore and offshore yuan regained some ground on Wednesday after dropping below the 7.23 and 7.24 mark, respectively.

With the US dollar index rising to its highest level since early July amid uncertainty from international investors, most other currencies have had to deal with devaluation pressures. The PBOC, however, is weathering unique challenges to its currency as Trump threatened a 60 per cent tariff on all Chinese imports during his campaign.