(Bloomberg) -- China’s yuan dropped to its weakest since March 2008 as uncertainty over the trade dispute with the U.S. persists.
The currency, which earlier this month breached 7 per dollar for the first time since the financial crisis, weakened 0.15% to 7.0740 per greenback as of 12:30 p.m. in Shanghai, extending a six-day drop to 0.7%, the biggest in Asia. The offshore rate fell 0.27%.
The weakness comes as U.S. President Donald Trump said overnight he was the “chosen one” to wage a trade war with China and asserted that he’s winning. The Chinese government is making arrangements for the possibility that no trade deal is reached with the U.S., Hu Xijin, editor-in-chief of the state-run Global Times, wrote in a tweet Wednesday.
The People’s Bank of China has set the yuan’s daily reference rate stronger-than-expected for two days in a row, but that’s failed to boost investor sentiment. Persistent declines risk creating a vicious cycle of capital outflows and even sharper drops in the currency -- a situation policy makers want to avoid. On Aug. 5, the yuan weakened past the key support level of 7 amid worsening trade tensions.
“The drop in the yuan should be controlled,” though the currency will face some pressure to weaken for now, said Stephen Chiu, a foreign-exchange and rates strategist at Bloomberg Intelligence.