I will return to this tomorrow with better sources. America is the aggressor in this.
TRADE WAR: China devalues yuan - DIRECT ATTACK UPON U.S. DOLLAR
22 July, 2018
THE TRADE war raging between China and the United States shows signs of spilling over into a battle over currency after Beijing’s central bank devalued its yuan against the dollar.
The People’s Bank of China dropped the dollar's reference rate to 6.7671 yuan - the most radical weakening of the currency in two years.
A cheaper yuan will make Chinese exports less expensive and has the potential to boost sales overseas.
The move came just hours after President Donald Trump threatened to slap tariffs on $500billion worth of Chinese goods.
President Trump has previously accused China of manipulating its currency to gain an unfair advantage over American businesses, a message he reiterated via Twitter yesterday. Now, China has done exactly that- an "an overt, in-your-face" attack on the U.S. Dollar!
Analysts are warning the devaluation of the yuan could be the first signs the ongoing trade war is descending into a currency war.
Jens Nordvig, CEO of Exante Data said: ”It’s starting to smell like it. We've had a trade war that's been going on for awhile, and now we're starting to hear talk about 'you shouldn't be doing that with your currency.”
China’s central bank is responsible for setting a daily exchange rate for the yuan.
And while the currency has been weakening in recent weeks, Mr Nordvig said Thursday’s sharp adjustment appeared to be a deliberate move.
He added: "It looked pretty deliberate to me it has been moving so fast.
"Clearly, the currency moving this fast negates the tariffs so from that perspective it's pretty understandable that Trump doesn't like what he's seeing."
America and China are already engaged in a tit-for-tat trade war on import tariffs, with Mr Trump imposing levies on $34bn worth of Chinese goods and Beijing responding in kind.
But the president threatened to escalate the war even further yesterday when he vowed he was “ready to go to 500” on tariffs - a reference to the $500bn worth of products China exported to the US in 2017.