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China’s yuan slid to the weakest level since January, as investors confronted the impact of escalating trade war tensions and fresh signs of fragility in the economy.
The onshore yuan fell 0.38 per cent -- extending its decline this week to 1.1 per cent -- to 6.8092 per dollar in Shanghai. The demand for bearish bets on the currency also climbed, as the offshore yuans three-month risk reversal spiked for a fifth straight day to the highest level since November.
That came as President Donald Trump declared Chinese leaders broke the deal he was negotiating with them on trade, ahead of fresh negotiations that were already clouded by imminent tariff increases and China’s threats of retaliation. Adding to strains on the sentiment, data released on Thursday showed Chinas credit growth slowed more than expected in April after record expansion in the first quarter, underlining the fragile nature of the recovery in the economy.
Chinese shares also fell, with the Shanghai Composite Index sliding to the lowest level since February and the SSE 50 Index of large enterprises dropping for a second day. The nations sovereign bonds advanced on weaker risk appetite, pushing the 10-year yield down by 2 basis points to 3.32 percent.
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