Investing.com – The safe-haven yen gained on Monday in Asia amid concerns surrounding the Sino-U.S. trade war.
The pair dropped 0.2% to 105.42 by 1:39 PM ET (05:39 GMT).
On Friday, U.S. President Donald Trump said he was not ready to make a deal with China and even called the scheduled trade talks in September into question.
Meanwhile, the remained in the spotlight after the People’s Bank of China (PBOC) set the official midpoint reference at 7.0211 per dollar on Monday, which was stronger than what analysts expected but was still the third consecutive session weaker than the key 7-yuan-per-dollar level.
The pair last traded at 7.0628, up 0.03%.
Last week, the U.S. Treasury announced that it officially labelled China as a currency manipulator after Beijing allowed the yuan to fall past 7 per dollar for the first time since 2008. White House trade advisor Peter Navarro warned that Washington will respond forcefully if China continues to weaken its currency to counter the effects of tariffs placed by the U.S.
The PBOC later denied it is deliberately devaluing the Chinese currency.
China’s moves “stoked fears of a competitive devaluation policy, putting pressure on other Asian currencies,” analysts at risk consultancy Eurasia Group wrote in a note that was cited by CNBC.
The article noted that China is not likely to allow any further rapid depreciation of the Chinese currency since “substantial devaluation would drive capital outflows and create one-way bets in the market on further depreciation, as seen in 2015 and 2016.”
China would want to keep the pace of depreciation against the dollar gradual, the analysts added. “The bank will also be careful not to allow the (yuan) to depreciate on a sustained basis against a broader basket of currencies.”
The pair and the pair were both largely unchanged at 0.6788 and 0.6470 respectively.
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