The yuan rose on Tuesday while the U.S. dollar was largely unchanged as a senior U.S. Treasury official expressed concern at the fall in the Chinese currency, according to Bloomberg.
Citing the Treasury official, Bloomberg added that the U.S. is considering naming China as a “currency manipulator” in a report due next week.
The USD/CNY pair last traded at 6.9197 by 11:30PM ET (03:30 GMT), down 0.2%. The yuan was under pressure in the previous session and slid to its lowest level in seven weeks after the People’s Bank of China announced on Sunday that it lowered the required reserve ratio (RRR) for some lenders by 1%.
The cut will become effective from Oct 15, according to a statement on the central bank’s website.
A total of 1.2 trillion yuan ($175 billion) would be released, of which 450 billion yuan is to be used to repay existing medium-term funding facilities, the central bank said.
On Monday, Chinese Foreign Minister and State Councillor Wang Yi accused the U.S. of “constantly escalating trade friction toward China,” and making “groundless criticism of China’s domestic and foreign policies” in a meeting with U.S. Secretary of State Mike Pompeo.
Pompeo responded by saying: “The issues that you have characterized, we have a fundamental disagreement.”
The yuan has plunged nearly 9% against the dollar in the past six months, and U.S. President Donald Trump has openly accused China of deliberately weakening its currency in multiple occasions this year.
Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was unchanged at 95.44.
Elsewhere, the USD/JPY pair slipped 0.09% to 113.14 as the Japanese yen came off an 11-month low of 114.55 yen per dollar reached last Thursday.
“The rise of U.S. Treasury yields is causing a correction of U.S. equity markets, which is typically a risk averse situation and causes the stronger yen,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
“The fall of the dollar/yen, typically below 113, is a good chance to buy the dollar on dips,” he said.