Volatility in yuan due to escalating US friction – PBOC

Zhu Jun, director-general of the People’s Bank of China’s international department, made the comments on Saturday to a forum held in the northern Chinese province of Heilongjiang.

The US Treasury Department on Monday labelled China a currency manipulator, hours after China let the yuan drop through a key support level to its lowest point in more than a decade. The moves jolted financial markets, fuelling fears of a global currency war.

Days earlier, US President Donald Trump had vowed to impose a 10 percent tariff on $300 billion of Chinese imports from Sept. 1, ending a temporary truce and sharply escalating the trade dispute.

Mr Zhu said that the yuan’s move was a normal reaction to Mr Trump’s tariff threat.

“The labelling…violates basic, common economic sense and international consensus, and is unconvincing,” Mr Zhu said, adding that the Chinese economy was resilient and capable of coping with various situations.

The year-long trade war between the world’s two largest economies has already spread beyond tit-for-tat tariffs on goods to other areas such as technology, and analysts caution retaliation could widen in scope and severity, weighing further on business confidence and global economic growth.

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