China’s central bank set the daily midpoint for the yuan at its weakest level since 2008 early Thursday, in a move likely to increase trade tensions with the U.S.
The People’s Bank of China set the yuan’s CNYUSD, -0.0042% reference point at 7.0039 against one U.S. dollar, according to Dow Jones Newswires. The bank allows the yuan to fluctuate up to 2% higher or lower than that level.
Reuters reported it was the weakest midpoint since April 21, 2008, and also the first time since 2008 that the midpoint has been weaker than 7 per dollar. The yuan’s midpoint had been set at 6.9996 per dollar on Wednesday.
Read: Why the ‘tail risk of a currency war can’t be ruled out’ as U.S.-China tensions mount
A weakening of the yuan below the critical 7 level on Monday sent global markets tumbling amid fears it was the first step in a currency war. A weaker yuan makes China’s exports more inexpensive, harming foreign competition. But Asian markets and U.S. futures were largely unfazed by Thursday’s move.
On Monday, the U.S. Treasury Department labeled China a currency manipulator for the first time since 1994.
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