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Photo = Yonhap news |
[Alpha Biz= Kim Jisun] On April 9, the U.S. and China both activated mutual tariffs, leading to a sharp drop in the value of the Chinese yuan and a surge in U.S. long-term Treasury yields.
On this day, the offshore yuan hit its lowest level since 2010, falling to 7.4273 yuan per dollar. Meanwhile, the U.S. 30-year Treasury bond yield briefly reached 4.997%, its highest level since January of this year.
Market analysts speculate that China responded to the U.S.'s implementation of a 104% tariff on Chinese goods by devaluing the yuan as part of a countermeasure. This move recalls the 2019 U.S.-China trade war, during which China aggressively devalued the yuan, causing the exchange rate to breach the 7 yuan per dollar level.
The sudden spike in U.S. long-term Treasury yields is also seen as a result of China dumping U.S. Treasury bonds, a move that could have led to the rise in yields. U.S. long-term bond yields had been declining recently due to concerns over an economic recession.
As the U.S.-China tariff war escalated, Asian stock markets plunged. The Nikkei 225 index fell 3.93%, and Taiwan’s TAIEX dropped 5.79%. The market reaction was further fueled by U.S. President Donald Trump’s remarks, threatening up to 100% tariffs on Taiwanese semiconductor giant TSMC if it did not build a factory in the U.S. The South Korean KOSPI also saw a 1.74% decline, breaking below the 2300 mark.
The Korean won weakened significantly, closing the week at 1,484.1 won per dollar, down 10.9 won from the previous trading session. This marked the lowest closing level since March 12, 2009, when it stood at 1,496.5 won per dollar. As risk-averse sentiment surged, the Japanese yen strengthened, with the exchange rate against the Korean won reaching 1,020.91 yen per 100 won.
알파경제 Kim Jisun (stockmk2020@alphabiz.co.kr)
