By Ambar Warrick
Investing.com-- China’s yuan hit its weakest level in nearly 15 years on Tuesday, while its offshore counterpart hit a new record low on growing concerns that the country’s new political leadership could jeopardize economic growth with anti-business policies.
The yuan fell 0.6% to 7.3079 to the dollar, its weakest level since December 2007, while the offshore yuan hit a new record low of 7.3735 to the dollar.
The Chinese currency was also hit by a weaker-than-expected daily midpoint fixing from the People’s Bank of China. The central bank set the parity rate 438 pips lower at 7.1668 against the dollar, according to state-run news agency Xinhua.
The yuan extended losses into a second session after President Xi Jinping secured a third consecutive leadership term on Sunday, and unveiled a new cabinet stacked with Communist Party loyalists.
The move drummed up concerns that the Chinese President will face little opposition in a potential nationalization of corporate interests, which could severely dent foreign capital flows to the country.
Chinese stocks crashed on Monday as Xi’s confirmation also brewed concerns that Beijing will ramp up its efforts to rein in major internet companies, which have been subject to numerous government probes and fines in the past two years.
Markets were also rattled by an earlier commitment by the government that it will maintain its zero-COVID policy. COVID-linked lockdowns are at the heart of China’s economic slowdown this year.
The move offset data showing better-than-expected economic growth in the third quarter. But other economic readings continued to paint a bleak picture for the Chinese economy.
China’s trade balance improved slightly in September from a sharp fall in August, thanks to better-than-expected exports. But imports barely expanded through the month, indicating muted demand.
The yuan has depreciated sharply this year as Chinese economic growth slowed. The PBoC is now trying to maintain a balancing act between rolling out more stimulus and preventing further weakness in the yuan.
Pressure from rising U.S. interest rates has also battered the currency.