The US presidential election is far from decided. But Chinese markets may already be getting jittery about the possibility that President Donald Trump could pull out a second term.
China’s yuan briefly plunged as much as 1.4% against the US dollar on Wednesday as Trump remained in contention with former Vice President Joe Biden and was projected to win key states like Florida and Texas.
The drop in the offshore yuan, where the currency is traded more freely, is the largest single-day percentage drop since February 2018, according to Stephen Innes, chief global market strategist for Axi.
The offshore yuan eventually pared losses, and was last down 0.7%, or about 6.7 yuan per US dollar. The more tightly controlled onshore yuan slumped 0.6% after falling more than 1% in Shanghai.
“In light of China-US tensions, the [renminbi] market movement hinges on the US election outcome,” according to Ken Cheung, chief foreign exchange strategist for Asia at Mizuho Bank. He wrote in a research note Wednesday that should Trump secure reelection, that would suggest “the extension of America First agenda and protectionism policy.”