Wan fell on a historic low on Tuesday, after China’s decision to relax her control over the Chinese currency in an attempt to boost its exports amid the escalating trade war with the US.

Specifically, just 17:30 in Greece, the Wan fell 0.4% to 7,3779 per dollar In New York’s transactions, that is, at the lowest level ever found.

Earlier in the same day, the People’s Bank of China revised the daily reference rate for its currency at 7,2038 per dollar, the weakest since September 2023.

It is the first time since the election of US President Donald Trump in November that the exchange rate broke the threshold of 7.20 yan per dollar.

Beijing believes that the weakening of Wuan will help to enhance the attractiveness of exports, which are a key driver of the Chinese economy that is facing strong pressure on the present situation due to the exterminating duties imposed by Trump and his threat to the US.

However, a steep currency slide is risked as it can raise concerns about Chinese economyto aggravate the outflows of capital and to alleviate the chances of any trade negotiations with Washington.

On the other hand, the artificial maintenance of the power of the Chinese currency can hurt exports and the country’s already ill -fated economy.

“China is expanding the flexibility of the exchange rate in the context of its tools to alleviate pressure in the midst of aggressive duties,” explains Becky Liu, head of macroeconomic strategy at Standard Chartered Bank.

After all, earlier on Tuesday, the Chinese Ministry of Commerce, responding to the new Trump threat to impose 50%of additional duties, said that ‘He will fight to the end’ If the United States is also making new duties, exhausting the latest hopes of a trade agreement between the two largest economies on the planet that had been reduced anyway after Beijing’s decision to retaliate, with the imposition of 34% duties on all US products and installing exports.

Defense Shock?

A possible revision of China’s monetary strategy was something that investors did not exclude from the first moment of Trump’s second term in the White House, but policymakers have repeatedly committed to keeping the Wan stable and preventing the exchange.

Investors are now looking for new indications from the central bank of China for If it will continue to monetary relaxationafter the duties increases have shocked world markets.

More and more analysts are now anticipating a sharp retreat in the near future.

Wells Fargo & Co. estimates that a possible deliberate devaluation of up to 15% of Chinese currency the next two months. Brad Betel, the world leader of the Department of In exchange for Jefferies Financial Group, gives Beijing to underestimate the yuan and adds that if the People’s Bank of China decides to do so, it is likely to “move aggressively, up to 20% or 30%”.

Most analysts, however, expect a less aggressive move, as a devaluation can aggravate capital outflows and reduce investor confidence in Chinese assets.