China is studying yuan devaluation as a tool in trade spat

(Apr 9): China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade spat with US President Donald Trump that has roiled financial markets worldwide.

Senior Chinese officials are studying a two-pronged analysis of the yuan that was prepared by the government, the people said. One part looks at the effect of using the currency as a tool in trade negotiations with the US, while a second part examines what would happen if China depreciates the yuan to offset the impact of any trade deal that curbs exports.

The analysis doesn’t mean officials will carry out a devaluation, which would require approval from top leaders, the people said, asking not to be named as the information is private. The yuan weakened as much as 0.2% to 6.3186 per dollar in onshore trading on Monday before trading little changed as of 5.49pm local time. China’s central bank didn’t immediately respond to a faxed request for comment.

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