China has kept the renminbi’s exchange rate steady against the US dollar in its first official currency fix since the announcement of new tariffs by US President Donald Trump. On Wednesday, the People’s Bank of China set the rate at Rmb7.169 to the dollar, a level similar to that before the weeklong Lunar New Year holiday, despite rising tensions and the trade war between the two nations.
The move comes after Trump announced an additional 10 percent tariff on Chinese exports, a decision that prompted China to retaliate with duties on US energy exports and other goods, set to take effect next week. In the past, China has been accused by senior US officials of intentionally weakening its currency to boost the competitiveness of its exports. During the last trade conflict with the US, Beijing allowed the renminbi to depreciate significantly as a countermeasure to the tariffs.
Given the backdrop of Trump’s tariff announcement, many global banks had expected the People’s Bank of China (PBoC) to weaken the renminbi in response to the stronger US dollar. The onshore renminbi is currently trading at Rmb7.28 to the dollar, near the upper limit of the 2 percent band allowed by the central bank. It has depreciated nearly 3 percent since the eve of Trump’s election victory in November.
The PBoC’s decision to keep the currency steady is seen as a signal that China is prepared to defend the renminbi’s value against the dollar, even as the US currency strengthens against other global currencies. Market experts, such as Ju Wang, head of foreign exchange and rates for greater China at BNP Paribas, interpret the fix as a sign that China is aiming to maintain stability in the renminbi, while also managing the economic challenges posed by the ongoing trade tensions.
In addition to the tariffs, China’s markets have experienced a shift in sentiment due to recent developments in the tech sector, notably from Chinese AI company DeepSeek. The company’s progress in large language models has reportedly changed investor outlooks, contributing to a more cautious approach toward shorting the renminbi. However, despite the optimism around Chinese assets, markets opened lower after a volatile period, with the CSI 300 index down by 0.2 percent and Hong Kong’s Hang Seng index dropping by 1 percent.
With ongoing concerns over the effects of additional tariffs, Wang cautioned that the currency and equity markets will remain volatile throughout the year, with traders continuing to navigate the unpredictable impact of the US-China trade conflict.
