China's yuan fell more than one percent to an
11-year low on Monday as fears of a sharp escalation in the U.S.-China trade
war are growing, leading to another currency slump in the Asian region.
As the Chinese currency suddenly crossed the
7-yuan barrier to the dollar for the first time since the global financial
crisis in 2008, a level that some market traders see as a key support.
Meanwhile, the yuan rose about 1.4 percent to 7.035
per dollar in offshore markets, while the onshore yuan reached 7.0424 per
dollar, noting that this is the first
time the Chinese currency to trade at this level since May 2008.
This fall came after the announcement made by
the Chinese side to fight back against the tariffs made by the American side,
as the U.S president Donald trump decided to impose a 10 percent tariffs on a
Chinese product that worth more than 300 billion dollars as the end for trade
truce between the two largest economies in the world.
In the same context, other Asian currencies
associated to the Chinese currency were affected by this fall. Taiwan dollar
fell more than 0.7 percent while the Korean won dropped 1.4 percent against
dollar, marking the largest drop since August 2016.
Investors resort to safe havens
The Japanese yen, which is considered a safe
haven for the traders, climbed 0.62 percent to 105.92 per dollar after it
reached 105.78 earlier in the session.
Another safe haven which is the Swiss franc also
rose 0.2 percent to reach 1.0883 against the euro. That is the highest level in
two years.
In the meantime, the dollar index, which
measures the performance of six major currencies against the dollar, fell 0.25
percent to 97.60 to extend its drop for a third session in a row.
Last week, the Federal Reserve opted to cut
interest rates by 25 basis points, but the dollar did not fall directly after
the decision.