The Chinese yuan collapsed amid Trump's victory in the US election
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Economics
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The Chinese yuan collapsed amid Trump's victory in the US election

Dollar and Yuan
Source:  online.ua

The Chinese yuan fell sharply in the foreign exchange market after the announcement of the victory of the Republican Donald Trump in the US presidential election.

Points of attention

  • Trump's victory in the US election caused a sharp collapse of the Chinese yuan in the foreign exchange market due to expected new tariffs on Chinese goods.
  • Persistently high US interest rates and trade tensions could undermine the currencies of trading partners, including the Chinese yuan.
  • China's President Xi Jinping expressed concerns over the possibility of new US tariffs and called for understanding between the countries.
  • Trump's threat to increase tariffs on Chinese goods by 60% poses significant risks to China's growth and the global economy.
  • The yuan depreciated during Trump's first term due to tariffs on Chinese goods and escalating trade tensions between the US and China.

Why Trump's victory in the US elections led to a sharp collapse of the yuan

It is noted that according to the results of trading on the foreign exchange market, on November 7, the Chinese currency fell to a three-month level.

Among the reasons for the sharp collapse of the Chinese currency are market concerns about new tariffs that Trump plans to impose on Chinese goods.

In particular, during the election campaign, Trump repeatedly promised to introduce tariffs on Chinese goods in the amount of at least 60% in order to protect American manufacturers.

Trump's victory in the US elections caused the Chinese yuan to collapse
Donald Trump

It is likely that this will lead to the maintenance of high interest rates in the US and undermine the currencies of trading partners.

At the same time, during Trump's first presidential term, the Chinese yuan depreciated by 5% against the dollar due to the introduction of tariffs on Chinese goods in 2018. Another year later, the yuan lost an additional 1.5% as trade tensions between the world's largest economies escalated.

How China reacts to Trump's victory in the US elections

Chinese President Xi Jinping congratulated Donald Trump on his victory in the US presidential election and urged the countries to find a common path to understanding, expressing concern over the US decision to introduce new tariffs on Chinese goods.

According to Reuters, the actual message of the leader of the People's Republic of China to Trump was much more restrained than after Trump's election victory in 2016.

Then Xi called for "greater progress in relations between China and the United States from a new starting point", saying that both economies should take responsibility in such areas as world peace and stability, global development and prosperity, the journalists of the publication remind.

The media reminds us that Trump's threat to impose tariffs of 60% on imports of Chinese goods into the US poses great risks for China's growth.

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