The renminbi weakened to its lowest level since January while the yen strengthened, as trade tensions weighed on the Chinese currency ahead of talks between the US and China in Washington on Thursday.
The onshore renminbi, which is permitted to trade 2 per cent either side of a daily mid point set by China’s central bank, fell 0.3 per cent to Rmb6.8014 to the dollar or its lowest level in almost four months. Offshore renminbi, which trades more freely in foreign markets, also fell 0.3 per cent to Rmb6.8286, a four-month low.
The Australian dollar, which is seen as a proxy for China’s economic prospects, fell 0.2 per cent to $0.6970.
Investors continued to pile into the yen, which is considered a haven in times of market turmoil. The Japanese currency strengthened 0.2 per cent to ¥109.91 against the dollar, taking its total gain this week to 1 per cent.
Asian markets have been roiled by the escalation of trade tensions between the US and China this week, sparked by President Donald Trump’s threat to increase tariffs on Chinese goods from Friday.
Thursday’s market reaction was followed by Mr Trump’s comments at a rally in Florida , where he said China “broke the deal”.
The latest round of talks between the US and China is set to begin in Washington on Thursday, and are expected to last through Friday.