China Supports Yuan Ahead of US Tariffs

China's central bank, the People's Bank of China (PBOC), set a stronger-than-expected fixing rate for the yuan at 7.1693 per US dollar, indicating its intention to maintain currency stability amid escalating US-China trade tensions. This decision comes as the US has imposed a 10% tariff on Chinese imports, leading analysts to expect a potential weakening of the yuan to support Chinese exporters, which has not materialized. Experts suggest that the strong fixing rate sends a signal that China is unwilling to devalue its currency significantly, aiming to foster a conducive environment for ongoing trade negotiations. Goldman Sachs and National Australia Bank predict that without a trade agreement, the yuan may drift toward 7.3 or even 7.5 per dollar. In response to the US tariffs, China has also implemented counter-tariffs and initiated an investigation into Google, reflecting the rising tensions between the two economic powers. The market remains cautious as traders await further developments in trade talks and currency adjustments.