Sources in China get rid of America’s currency with the escalation of the trade war

A number of Chinese exporters are rushing to convert their income in dollars into the yuan, betting that the worst losses in the local currency as a result of customs duties have ended.

A poll conducted by “Bloomberg” included 18 Chinese sources, that these exporters have already turned their ownership from the dollar to the yuan, or intend to do so immediately, considering that the current yuan exchange rate of 7.3 per dollar is a favorable opportunity.

Interviews were conducted with companies working in sectors that vary between furniture, ceramics, decorative lighting and gardening, up to clothes, while participating in the “Canton” exhibition in Guangdong Province earlier this month. The annual revenues of these companies ranged from exports between 10 million and 300 million dollars.

Chinese exporters’ strategies turn

Chinese exporters’ strategies have changed, as they move to give up the dollar after they have been winning it since late last year, fearing that China will weaken the yuan due to the American customs duties imposed on Beijing. It seems that these bets on the decline in the yuan had already been achieved, after the currency fell to its lowest levels since 2023, following Washington’s imposition of customs duties of 145% on Chinese goods this month.

The Chairman of the Board of Directors of “Aroma International” specializing in the export of Halloween decorations in Liaoning, northern China, Albert Chai, said, “It is unlikely that the yuan will witness more decline, as the 145% American customs duties represent the worst possible scenario, and nothing may be worse than that,” adding that the survival of the yuan is fluctuating in a range ranging between 7.25 and 7.35 per each per each. A dollar is beneficial to the company’s operations in the cross -border trade.

The weak yuan provides opportunities for exporters

The Chinese yuan instead of part of its losses this month, with the decline in the strength of the dollar as a result of the escalation of doubts about the American exceptional, yet the Chinese currency is still the third worst performance in Asia since the beginning of the year, after the Indonesian rupee and the dollar of Hong Kong. It also remains close to its lowest levels in 21 months against a basket of trading partners.

The yuan’s weakness opens the door to exporters who were refraining from transferring their returns from the dollar to the yuan to move recently. Cash liquidity may be useful at a time when profit margins shrink due to high customs duties, which increases the need for funding needed to buy raw materials and pay wages.

China has challenged the expectations of reducing the value of its currency to support exports, and instead chose to calm any fluctuations in the market through the daily reference exchange rate of the yuan, and the exporters included in the survey said that the Chinese People’s Bank will not allow a significant decrease in the value of the yuan.

Beijing pledged on Monday to provide more support to the exporters affected by the American customs duties, as it has developed plans to ensure that the troubled companies obtained the loans they need and enhance local consumption.