U.S. President Donald Trump on Tuesday repeated his threat to impose tariffs on $267 billion worth of additional Chinese imports if China retaliates for the recent levies and other measures the United States has taken in the countries' escalating trade war. Last month Trump imposed tariffs on nearly US$200 billion of Chinese imports and then threatened more levies if China retaliated. China then hit back with tariffs on about US$60 billion of US imports. Citing the growing trade war, the International Monetary Fund on Tuesday cut its global economic growth forecasts for 2018 and 2019.
Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund said on Wednesday. But the IMF's chief economist said he was not concerned about China's ability to defend its currency. IMF chief economist Maurice Obstfeld said yesterday that he was not concerned about the Chinese Government's ability to defend its currency despite the recent depreciation of the yuan. But Obstfeld also told the news conference that China would face a balancing act between actions to shore up growth and ensure financial stability. China's yuan currency has faced strong selling pressure this year, losing over 8 percent between March and August at the height of market worries, though it has since pared losses as authorities stepped up support.
The central bank fixed the yuan's official mid-point for trading at 6.9019 per U.S. dollar yesterday, edging close to the psychologically important 7.0 barrier. A U.S. Treasury official Monday repeated that the Trump administration was concerned about the yuan's recent weakening as the department prepares a semi-annual report on currency manipulation due out next week. Obstfeld said financial markets have overly emphasized short-term movements in China's currency, adding that the yuan has often quickly recovered from periods of volatility in recent years. The IMF has been recommending that Chinese authorities de-emphasize the quantity of growth to focus more on its quality and sustainability to allow the economy to better withstand shocks, Obstfeld said. The IMF chief economist said that while government officials have been moving to rein in China's credit expansion, it was understandable they would take steps to boost growth in the face of trade tensions with the United States, and these have impacted short-term economic growth, affecting the yuan.
OFFSHORE MARKET NEWS, US stock market closed mixed on Tuesday, as investors worried about global growth prospects. The Dow Jones Industrial Average dipped 56.21 points or 0.2% to 26,430.57 and the S&P 500 edged down 4.09 points or 0.1% to 2,880.34. The tech-heavy Nasdaq inched up 2.07 points to 7,738.02
The major European markets ended higher on Tuesday. The German DAX Index and the French CAC 40 Index rose by 0.3% and 0.4%, respectively. The U.K.'s FTSE 100 Index inched up by 0.1%.
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