China Sinking Yuan

FILE - In this file photo taken Sunday, Jan. 1, 2017, a security guard wearing a protection mask against air pollution takes a rest near a bank window panel displaying the security markers on the latest Yuan note in Beijing. China's government on Tuesday, Oct. 9, 2018 promised not to weaken its currency to boost exports and rejected U.S. concern about the sagging yuan as groundless and irresponsible. (AP Photo/Andy Wong, File)

BEIJING — China promised Tuesday not to weaken its currency to boost exports during a tariff fight with Washington and rejected U.S. concern about the yuan’s sagging exchange rate as groundless and irresponsible.

Beijing has no intention of using “competitive devaluation,” said a foreign ministry spokesman, Lu Kang.

A U.S. official told reporters in Washington the Trump administration is concerned about the weakening yuan. The official spoke on condition of anonymity ahead of Treasury Secretary Steven Mnuchin’s trip to Indonesia for meetings of the International Monetary Fund and World Bank.

The tightly controlled yuan has lost almost 10% of its value against the dollar this year. That prompted suggestions Beijing might weaken the currency to help exporters that face punitive U.S. tariffs of up to 25%.

However, the decline also threatens to damage the Chinese economy by encouraging capital to flow out of the world’s second-largest economy, increasing borrowing costs at a time when communist leaders are trying to shore up cooling growth. The central bank intervened in August and tightened controls to discourage speculative trading.

Weaker Chinese economic growth “is likely to further weigh on” the exchange rate, Luc Luyet of Pictet Wealth Management said in a report.

On Monday, the yuan sank to a 22-month low of 6.93 to the dollar, making one yuan worth about 14.4 cents. It edged up to 6.92 to the dollar on Tuesday.

The U.S. official’s comments were “groundless speculation and irresponsible,” said Lu at a regular news briefing.

Washington and Beijing have imposed punitive tariffs of up to 25 percent on billions of dollars of each other’s goods in an escalating fight over U.S. complaints China steals or pressures companies to hand over technology.

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