Asian Markets Gain as Yuan Falls to Lowest in 17 Years

Asian markets experienced a mixed day of trading Thursday, reflecting the impact of U.S. President Donald Trump’s announcement of a 90-day pause on higher tariffs for most nations, excluding China. This decision followed a week of steep declines across global markets due to the imposition of tariffs ranging from 10% to 50% on over 180 countries.

Market Performance

Japan’s Nikkei 225 index surged by 9.13% during Asian market hours, gaining 2,894.97 points to close at 34,609. The Asia Dow, which tracks leading blue-chip companies across the region, jumped 5.94% to 3,868.32 points.

Hong Kong’s Hang Seng Index rose 2.06%, closing at 20,681.78, while China’s Shanghai Stock Exchange saw a modest increase during Asian market hours of 1.16%, ending at 3,223.64. However, India’s Sensex index dropped by 0.51%, closing at 73,847.15.

Tariff Pause and Its Implications on Asian Markets

Trump’s decision to pause “reciprocal tariffs” for 90 days provided temporary relief to global markets, which had been reeling from the economic uncertainty caused by the tariff hikes. While most nations welcomed the pause, China faced an immediate increase in tariffs to 125%, further escalating tensions between the world’s two largest economies.

The trade standoff between the U.S. and China intensified as Beijing accused Washington of exerting “maximum pressure” and using tariffs as a “weapon”. China’s Foreign Ministry spokesman Lin Jian vowed that Beijing’s response would “continue until the end,” emphasizing the nation’s resilience against what it described as “selfish” moves by the U.S.. Trump, on the other hand, expressed optimism about reaching a deal, stating, “China wants to make a deal. They just don’t know how quick to go about it”.

The Chinese Yuan faced significant pressure during Asian market hours, hitting its weakest level in over 17 years amid escalating trade tensions between the U.S. and China. The onshore Yuan closed at 7.3498 per dollar, marking its lowest point since December 2007. This decline followed the implementation of U.S. President Donald Trump’s “reciprocal” tariffs, which included a massive 125% duty on Chinese goods. Despite the depreciation, China’s central bank has reportedly taken measures to stabilize the currency, instructing major state-owned banks to limit U.S. dollar purchases.

Global Economic Impact

The ongoing tariff conflict has raised concerns about its potential to disrupt global trade and economic stability across Asian markets. While the temporary tariff pause has calmed markets, the heightened tariffs on China and the retaliatory measures from Beijing continue to pose significant risks. Analysts warn that the standoff could lead to prolonged economic uncertainty, affecting supply chains and consumer prices worldwide.

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