April 10, 2025 – The Chinese yuan has plunged to its weakest level against the U.S. dollar since December 2007, rattling global markets as trade tensions between Washington and Beijing escalate. On April 9, 2025, the onshore yuan closed at 7.3498 per dollar, marking a dramatic drop fueled by former President Donald Trump’s aggressive 104% tariffs on Chinese imports. Meanwhile, the offshore yuan hit an unprecedented low of 7.4288 overnight, signaling deepening economic strain.
Why Is the Yuan Crashing?
The yuan’s sharp decline comes as the U.S. intensifies its trade war with China, with Trump’s latest tariffs targeting key Chinese industries. Analysts suggest Beijing is allowing a controlled depreciation to boost exports and offset the impact of punitive U.S. trade measures. The People’s Bank of China (PBOC) set the daily reference rate at 7.2066, the weakest since September 2023, while permitting a 2% trading band—a clear signal of strategic devaluation.
State Banks Step In to Stabilize Yuan
As the yuan tumbled, Chinese state-owned banks reportedly sold U.S. dollars to slow the decline, preventing a steeper fall. This intervention highlights Beijing’s delicate balancing act: allowing enough depreciation to aid exporters while avoiding a full-blown currency crisis.
Global Market Reactions
The yuan’s slump has sent shockwaves through financial markets:
- Asian stocks dipped as investors feared prolonged trade disruptions.
- Commodity prices wobbled, with copper and iron ore—key Chinese imports—facing volatility.
- The dollar surged, reinforcing concerns over global currency instability.
What’s Next for China’s Economy?
With Trump’s tariffs squeezing Chinese exports, Beijing faces mounting pressure to stabilize growth. A weaker yuan could provide short-term relief for manufacturers but risks capital flight and inflation. If the U.S. imposes further restrictions, China may retaliate with non-tariff barriers, escalating the economic standoff.
Bottom Line
The yuan’s plunge to an 18-year low underscores the deepening U.S.-China trade rift. As Trump’s tariffs bite, Beijing is walking a tightrope—using currency policy to cushion economic blows without triggering a financial panic. Investors should brace for more volatility as the world’s two largest economies lock horns.
