The dollar firmed against a basket of currencies on Friday and hit a more than 14-month high against the yuan, with markets gripped by worries over escalating trade tensions between the United States and China.
China vowed on Thursday to retaliate if the U.S. acted on a threat to raise tariffs on the Asian nation’s exports, after U.S. President Donald Trump instructed his trade officials to look at increasing tariffs to 25 percent from 10 percent on $200 billion in Chinese imports into the United States.
But, as the United States imports far more from China, than China does from the United States, investors see a trade war causing greater pain for the Chinese economy.
“It seems that the markets are reacting to the U.S.-China trade war as the U.S. is the winner whereas China is the loser,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
