China’s renminbi has weakened beyond the Rmb7 per dollar level for the first time since the global financial crisis, breaching a widely recognised floor that China’s central bank has previously defended during bouts of sharp depreciation, as prospects of a trade deal fade in the wake of Washington’s latest tariff threat.
The onshore exchange rate for the renminbi, which trades 2 per cent on either side of a daily midpoint set by the People’s Bank of China, fell past Rmb7 at the open on Monday for the first time since May 2008, weakening 1.3 per cent to Rmb7.0297 a dollar.
The latest move downward for the renminbi follows on the heels of a rough week which saw it drop 0.9 per cent against the dollar as Donald Trump’s sudden escalation of trade tensions with China rattled global markets, triggering a sell-off in equities and a flight to government debt on Friday.
The offshore renminbi extended losses after the onshore rate began trading, with losses for the latter steepening to 1.8 per cent as it fell to Rmb7.1013.
Monday morning marked the first time the offshore rate, which is less strictly regulated than its onshore counterpart, crossed the Rmb7 threshold since it began trading in 2010.