The yuan inched up on Wednesday after China’s foreign ministry spokesperson Lu Kang said the country has no intention of using “competitive devaluation.”

Lu said at a regular news briefing that the recent accusations U.S. officials made against China of intentionally weakening the currency to help exporters had been “groundless speculation and irresponsible.”

Bloomberg reported on Tuesday that a senior U.S. treasury official expressed concern at the fall in the yuan and that Washington was considering naming China as a “currency manipulator” in a report due next week.

The USD/CNY pair slipped 0.03% at 6.9304 by 12:30AM ET (04:30 GMT) as the People’s Bank of China (PBOC) set the yuan reference rate at 6.9072 vs the previous day’s fix of 6.9019.

Elsewhere, a Reuters poll showed that the yuan could potentially pare some of its recent losses in 2019 as traders expected trade tensions with the U.S. and sell-off in emerging markets would eventually subside.

The poll of over 50 foreign exchange strategists suggested that the Chinese currency would trade at 6.80 per dollar in 2019.

“The most likely scenario for a strong CNY rebound against USD is for risk-on sentiment to resume again. This will likely only come when the negativity from U.S.-China tensions and EM risks fades,” said Jeff Ng, Asia chief economist at Continuum Economics.

“We believe that the most likely trigger would be a resolution of U.S.-China trade talks, given the unpredictable nature of U.S. President Donald Trump. Other possible triggers could also stem from a stronger trade relationship between China and Europe or investors finally finding another positive reason to put risk on the table again.”

Trump’s administration announced in September that it imposed 10% tariffs on $200 billion of Chinese goods.

U.S. President Donald Trump, in a statement, said that the tariffs would rise to 25% in January 2019, adding that ”if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

In the same week, Beijing announced retaliatory tariffs that targeted more than 5,000 U.S. products worth $60 billion. The new tariffs would take effect on Sep 24, China’s Ministry of Finance said in a statement. The country’s commerce ministry also filed a complaint to the World Trade Organization (WTO) against the U.S., according to reports.

The U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.1% to 95.29. The index reached 96.163 earlier in the week, its highest level since Aug. 20.

The USD/JPY pair was up 0.1% at 113.06, while the AUD/USD pair also gained 0.2% at 0.7119.

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