China's currency slid to its lowest point in more than 11 years as concerns over the US trade war and the potential for global recession weighed on markets.China’s yuan slumped to a fresh 11-year low against the dollar on Monday and stocks fell as the Sino-U.S. trade war sharply escalated, threatening to inflict more damage on the world’s largest economies and weigh further on global growth.
On Friday, U.S. President Donald Trump announced an additional duty on some $550-billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75-billion worth of U.S. goods. China’s central bank had been seen trying to stabilize the yuan in recent weeks after allowing a sudden slide in its value in early August following new U.S. tariff threats. On Friday, traders thought it was signaling a floor at the 7.1 level.But Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong, expects further weakness in the yuan for the rest of this year following the latest dramatic escalation.
In Hong Kong, the Hang Seng Index dropped more than 3 per cent in morning trade as investor confidence continued to weaken amid the deteriorating trade outlook and the latest flare-up in violent anti-government protests in the city.“The sentiment towards local companies is really bad. People have been pessimistic on the rental and tourism outlook and what happened over the weekend doesn’t help,” said Alex Wong, director at Ample Finance Group in Hong Kong.
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