SHANGHAI: China's yuan eased against the U.S. dollar on Wednesday, hovering near a 4-month-low, as the country's industrial profits extended declines in October, and as investors weighed the potential impact of new U.S. tariffs.
Profits in October fell 10 per cent from a year earlier, following a 27.1 per cent slump in September, official data showed on Wednesday, as demand remained soft in the US$19 trillion economy.
Spot yuan opened at 7.2460 per dollar and was last trading 58 pips lower than the previous late session close at 7.2561 per dollar as of 0301 GMT and 0.8 per cent weaker than the midpoint.
Globally, the dollar steadied on Wednesday, struggling to extend gains after a spike triggered by U.S. President-elect Donald Trump's threat on Monday to impose tariffs on Mexico, Canada and China.
Trump said that he would impose a 25 per cent tariff on all products from Mexico and Canada, and an additional 10 per cent tariff on goods from China once he assumes office in January.
"Watch any headlines from Commerce Secretary nominee Lutnick as closely as you would headlines from Trump. Lutnick, while likely to support Trump's tariff agenda, will hold the key to tariff implementation," said Citi analysts in a note.
"Remind that he will likely be a China hawk, keeping USD/CNH on an uptrend." During Trump's first term as president, the yuan weakened about 5 per cent against the dollar after the initial round of U.S. tariffs on Chinese goods in 2018, and fell another 1.5 per cent a year later when trade tensions escalated.
The minutes of the U.S. central bank's November meeting released on Tuesday showed many policymakers in agreement that it was appropriate to reduce policy restraints gradually.
Prior to the market opening, the People's Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2 per cent band, at 7.1982 per dollar, 553 pips firmer than a Reuters' estimate. The offshore yuan traded at 7.2644 yuan per dollar, down about 0.08 per cent in Asian trade.