USD/CNY fix: PBoC fixes at 7.0883 (prev fix 7.0879; prev close 7.1580)

• PBoC fixed the USD/CNY reference rate at 7.0883 (prev fix 7.0879).
• A weaker currency will help offset the impact of higher tariffs on Chinese goods.

PBoC fixed the USD/CNY reference rate at 7.0883 (prev fix 7.0879; prev close 7.1580) and skipped the reverse repo today.

China, last month, allowed the yuan to fall past 7, a key level defended by the authorities in the past, and had pinned the blame on U.S. protectionism. A weaker currency will help offset the impact of higher tariffs on Chinese goods of which a fresh round kicked in today, although an uncontrolled decline will likely cause instability in its markets as well as spur capital flight - President Donald Trump called the yuan’s plunge below the symbolic level of 7 per dollar “currency manipulation” in a recent tweet.

• US and Chinese tariffs went into effect early Sunday