Forex - Yuan Trades Near Two-Year Lows on Tariffs Concerns

The Chinese yuan dipped on Tuesday and traded near two-year lows following reports that U.S. President Donald Trump was considering imposing tariffs on all remaining Chinese imports by December.

The yuan moved closer to the key level of 7.0000 per dollar as the USD/CNY pair inched up 0.2% to 6.9699 by 11:30 PM ET (03:30 GMT).

The fall in the Chinese currency came after Bloomberg reported that the U.S. is preparing to impose tariffs on the remaining $257 billion of Chinese imports if talks in November between U.S. President Donald Trump and Chinese leader Xi Jinping do not go well.

The two leaders are due to meet during the Group of 20 leaders summit in Argentina at the end of November.

The yuan was under pressure in recent months and plunged 9% since April after the People’s Bank of China cut its reserve-ratio requirement for the fourth time this year.

Despite recent weakness in the yuan, Chinese media said this week that the Chinese currency is unlikely to weaken beyond 7.0000 against the dollar.

The PBOC set its official Yuan midpoint to the lowest level in over a decade on Tuesday. The Yuan reference rate was fixed at 6.9574 per dollar, 0.3% weaker than the previous fix of 6.9377.

Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was up 0.3% to 96.44. The greenback was supported by safe-haven demand amid rising trade tensions between China and the U.S.

The Japanese yen, also considered a safe-haven asset during times of uncertainty, was down 0.4% against the dollar ahead of the Bank of Japan's monetary policy announcement due on Wednesday.

Elsewhere, the AUD/USD pair and the NZD/USD pair both gained 0.4%.