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Verbal signals by the People's Bank of China so far suggest that it wants to keep a tight grip on the Chinese yuan as a second trade war with the U.S. looms. (Nikkei montage/Source photos by Reuters and Akira Kodaka)

Investors brace for 'slow-burn' yuan weakening in 2025

Chinese central bank vows to step up control as currency nears 17-year low

WATARU SUZUKI and ECHO WONG, Nikkei staff writers

January 13, 2025 06:00 JST

Updated on January 13, 2025 11:53 JST

SHANGHAI/HONG KONG -- Investors are bracing for a gradual weakening of the Chinese yuan against the U.S. dollar as the Chinese central bank's aim of keeping the currency stable faces pressure from rapidly falling domestic interest rates and the looming threat of tariffs by U.S. President-elect Donald Trump.

A change of tone in recent policy communications and a high volume of offshore yuan bond issuance show the central bank's determination to defend the currency's strength.