SHANGHAI: China´s yuan skidded to a more than 5-month low against the U.S. dollar on Tuesday, despite firmer central bank guidance, as sentiment soured in the wake of escalating trade tensions between the world´s two largest economies.
Chinese stocks also tumbled on Tuesday with the benchmark Shanghai Composite Index falling about 3 percent in morning trade.
U.S. President Donald Trump threatened on Monday to impose a 10 percent tariff on $200 billion of Chinese goods, raising the stakes in the tit-for-tat trade war with Beijing.
"Tariffs could conceivably push policymakers to lean towards a slightly weaker yuan, other things (being) equal," economists at Goldman Sachs said in a note.
Prior to market opening on Tuesday, the People´s Bank of China set the midpoint rate at 6.4235 per dollar, 71 pips or 0.1 percent firmer than the previous fix 6.4306. But the firmer guidance failed to lift the spot rate.