Investing.com - The Chinese yuan slid against the dollar on Tuesday morning in Asia to the lowest level since December 28. The escalating trade tension between the U.S. and China also lifted the safe-haven yen amid risk aversion. The Sino-U.S. trade talks continues to be the focus of this week.
The USD/CNY pair rose 0.16% to 6.5556 at 12:09AM ET (04:09GMT), the highest level since December 28. The People's Bank of China (PBOC) set the reference rate of the yuan against the dollar at 6.5180 versus the previous day’s 6.4893.
The yuan lost ground to the dollar due to the PBOC’s liquidity injection. The central bank said it will cut the amount of cash some banks must hold as reserves, unlocking US$100 billion of liquidity to control leverage and support companies.
The U.S. dollar index that measures the greenback against a basket of six major currencies dropped 0.07% to 93.88.
The U.S. Treasury Department was said to be drafting curbs to stop companies with at least 25% Chinese ownership from buying U.S. tech firms. The news sent the U.S. stocks down on Monday.
Chinese Vice Premier Liu He, who is also President Xi Jinping’s top economic adviser, said China is prepared to face off against U.S.’s tariff threats. Meanwhile, White House trade adviser Peter Navarro said American restriction on Chinese investments would not be as damaging to growth as markets expected.
The USD/JPY pair dropped 0.26% to 109.48 on Tuesday morning. The new round of moves clouded investing prospects and hampered risk appetite. The yen attracts demand in times of political tensions and market turmoil.
In Australia, the AUD/USD pair stood at 0.7410, sliding 0.07%. The Aussie was also weighed down by the risk aversion in the financial markets.