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China has kept the renminbi’s exchange rate with the dollar steady in its first official currency fix since US President Donald Trump hit the country with tariffs.
The People’s Bank of China on Wednesday set the rate at Rmb7.169 a dollar, close to the level before a more than week-long lunar new year holiday.
During the market closure, Trump announced an extra 10 per cent tariff on Chinese exports, and Beijing retaliated with duties on US energy exports and other goods due to come into effect next week.
Senior Trump administration officials have long criticised China for keeping its currency weak in order to boost its exports’ competitiveness. During the last trade war under Trump’s first term, Beijing allowed the renminbi to depreciate to cushion the blow of US tariffs on its exports.
Global banks had anticipated the PBoC to weaken the renminbi in response to Trump’s tariffs and a stronger dollar. The onshore renminbi is trading at Rmb7.28 a dollar, close to the top of the 2 per cent band in which the central bank allows the currency to move. It has depreciated almost 3 per cent since the eve of Trump’s election victory in November.
Wednesday’s fix can be interpreted as a signal that China is prepared to defend the renminbi’s value against the dollar, even as the latter appreciates against other trading currencies. Beijing is attempting to reflate its economy and navigate the next moves from the Trump administration.
“This is a signal to the market that they will hold the renminbi, for now,” said Ju Wang, head of foreign exchange and rates for greater China at BNP Paribas.
The sentiment around Chinese assets has improved since Chinese AI company DeepSeek took Silicon Valley by surprise with its progress in large language models, she added.
“People will be a bit more cautious about shorting the renminbi . . . there has been an equity sentiment change, really led by DeepSeek.”
Mainland Chinese markets opened positive in their first trading session since the market turmoil unleashed by DeepSeek but fell shortly after.
The CSI 300 index of mainland-listed companies was down 0.2 per cent in early trading, while Hong Kong’s Hang Seng declined 1 per cent.
“This is a high-volatility market . . . and a labour-intensive job for currency traders this year,” said Wang, who warned that the threat of further tariffs would “continue to weigh on the currency and equity markets”.
