China allows weaker yuan but still fights downward pressures

Market forces would sink currency even lower if Beijing did not intervene

The yuan fell below the critical 7-to-the-dollar level in early August, prompting the U.S. to label China as a "currency manipulator". © Reuters

ISSAKU HARADA, KYO KITAZUME and KAZUYA MANABE, Nikkei staff writers

August 18, 2019 02:04 JST

BEIJING/TOKYO -- China has once again started letting the yuan weaken in what appears to be an effort to shield exporters from the blow of additional U.S. tariffs, but the redback's modest decline reveals authorities are far more concerned about a currency that is too weak, not too strong.

In fact, over the past several years, the yuan has been under great selling pressure. If Beijing were to entirely let the market determine the level of its currency, the yuan would likely be far weaker than it is now, calculations show.